Question: Is it allowed to under cost your products so that you will pay less tax to the government when managing a business? What is the Islamic Law concerning business?
Answer: Assalamu Alaikum,
Scholars have mentioned that this is not allowed. In this regard, the following answer has been given by Mufti Ibraheem Desai in response to a similar question.
The question posed to him was: “I am an importer of goods and have always been honest in paying my government duties. I have noticed that importers request their suppliers to under-invoice the consignment in order to pay a lesser amount in government duty. By me importing goods the proper way, I will be more expensive and will not be competitive in the market. Is it permissible for me to under-invoice the consignment in order to be competitive in the market?”
Answer: Every person who resides in a country or acquires its citizenship and enters into an agreement with that government should follow the laws of that land, therefore, he is under obligation to follow the laws unless a law of the land that compels him to do an act which is prohibited in Shariah. On the basis of this principle, since smuggling is illegal, a Muslim is required to abide by this restriction. (Justice Mufti Taqi Usmani, Pakistan) (Al Mahmood pg. 72. Fatawas by Mufti Ibraheem Desai-Darul Ifta Madrasah In’aamiyyah Camperdown South Africa).
And Allah Knows Best.
Mufti Waseem Khan.
This answer was collected from DarulUloomTT.net, which is operated under the supervision of Mufti Waseem Khan from Darul Uloom Trinidad and Tobago.