Does Islam Permit Tax Evasion?

Question

Given a question on how an Islamic state handles tax, I'm sure some people are wondering: does Islam permit tax evasion?

Tax evasion refers to "trying to get out of paying tax that you rightfully owe, wherever you live." For example, if you earn $50k and get $10k in gifts, depending on where you live, you may be required to claim that $10k as income and pay taxes to the government. Tax evasion here would be to avoid declaring that amount in order to avoid paying tax on it.

Also to clarify, this question is about Muslims living in a Muslim or non-Muslim country where taxes are collected by law. Not an Islamic state (which doesn't exist).

Answer 1

By living in a country you are in fact striking a form of contract with the government of that country to follow it's laws. As long as these laws do not contradict Islam you are obliged by your contract to follow those laws.

Evading taxes means breaking the law of the country you are residing in, thus breaking your contract. Something a Muslim must no do. See this ayah:

"And do not approach the property of an orphan, except in the way that is best, until he reaches maturity. And fulfill [every] commitment. Indeed, the commitment is ever [that about which one will be] questioned."

An-Nahl (17:34) (Emphasis mine)

Answer 2

According to jafari Fiqh if Tax Evasion is illegal it is Haram (forbidden).

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Ref.:

By Online Answering from Official website of Grand Ayatollah Makarem Shirazi

Answer 3

The default ruling is that it is permissible as there is no covenant of Kafir with the Muslim leadership. And Quran has abolished all the past covenants with Kuffar. There is no new covenant made by Islamic leadership with the Kuffar.

All kuffar who are not under the contract of dhimmah are enemies from whom ghanimah is taken:

{إِنَّ الْكَافِرِينَ كَانُوا لَكُمْ عَدُوًّا مُبِينًا}

Verily the kuffar are an open enemy to you [ al-Nisaʾ 101]

Financial war is also jihad. Any wealth taken from the kuffar through deception or defeat is considered war booty(ghanimat).

Allah's Messenger said:

«الحَرْبُ خَدْعَةٌ»

War is deception.(Sahih Bukhari,Muslim)

If you are living in a country which is at war with Muslims and allies in killing Muslims elsewhere then your Tax is a contribution to them and you also become partner in the crime, IslamQA suggests migration to be the first option but if you have a signed contract with the government then you are liable to pay it but does not consider the state of war aspect.

Allah knows best

References:

http://www.ghuraba.info/en/ybahrumi/taking-wealth-from-the-kuffar/

http://islamqa.info/en/52810

Answer 4

In my own personal opinion, I don't think that tax evasion would be permitted due to the following reasons:

1. We should follow the laws of the land
2. Tax evasion involves dishonesty
3. Unpaid taxes could possibly create a debt, which could have serious consequences if we die before paying it

Please also take a look at http://www.mah.uk.com/is-tax-evasion-halal-or-haram/