Taxation in Islam

Q5: What is the Islamic ruling for working in a tax collection authority that imposes tax on both Muslim and non Muslim businesses? I am an Accountant and work in a tax collection authority in The Gambia West Africa, although I do not directly collect or record tax collection.

In the name of Allah, all praise is due to Allah, and may Peace and Blessings be upon the Messenger of Allah (ﷺ).

Answer:

Taxes can be understood in two different ways:

1. Justified Taxation:

This is when the government collects taxes in order to provide public services like electricity, roads, and other daily life necessities. The government itself doesn’t have money, so it collects tax from the people to serve them. If the government genuinely needs money and the method is through taxation, then there is no problem working for such a government.

2. Unjust or Excessive Taxation:

This is when the government collects more than it actually needs. For example, it might only need 1% but collects 13% or 15% simply because it can.

This hadith is not considered authentic:

“The unjust tax collector will not enter Paradise.”

There is Sahih Hadith about story of a woman named Ghamid:

“...she has repented to such an extent that if one who wrongfully takes extra tax were to repent to a like extent, he would be forgiven.”

– Sunan Abi Dawud 4442

This indicates that taking excessive tax is a major sin, which requires sincere Tawbah (repentance).

So, working in a tax system that collects more than what is required falls under major sin. Even indirect roles, such as a cleaner or garbage collector in such a system, are also considered haram.

“If the Bayt al-Mal (Islamic treasury) does not have enough to support the needs of the Muslims—such as jihad, salaries, and public welfare—then it is permissible to take from the people (i.e., taxes) according to what is just and fair.”

– Shaykh al-Islam Ibn Taymiyyah, Majmū‘ al-Fatāwā

So, if it is a necessary border tax or essential tax that the government requires and it is not excessive or wasteful, then it is permissible to pay and permissible to work in such a system. And Allah knows best.