Taxation in Islam

Question: 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.

Summary:

The permissibility of working in a tax authority in Islam depends on the nature of the taxation itself. If the government imposes just and necessary taxes to provide essential services and does not engage in unjust or excessive collection, then such a system is considered permissible. However, if the tax system is known for exploiting people by charging more than what is needed, then working for such a system, becomes impermissible and falls under major sin.

Answer:

In the name of Allah, all praise is due to Allah, and peace and blessings be upon the Messenger of Allah.

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.

      From the Sunnah:

      • Sunan Abī Dāwūd 2937Uqbah ibn Amir
        I heard the Messenger of Allah (ﷺ) as saying: One who wrongfully takes an extra tax (sahib maks) will not enter Paradise.

        This hadith is not authentic

      From the Sunnah:

      • Sahih Muslim 1695bAllah's Messenger (ﷺ) said:
        By Him in Whose Hand is my life, she has made such a repentance that even if a wrongful tax-collector were to repent, he would have been forgiven.

        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.

      From the Scholars:

      • Shaykh al-Islam Ibn Taymiyyah, Majmū‘ al-Fatāwā
        “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.”

        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.

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