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Avoiding Government Taxes

Answered according to Hanafi Fiqh by Fatwaa.com

Assalamu ‘alaykum wa rahmatullahi wa barakatuh,

In Italy it’s compulsory by law to issue a “fiscal receipt” for every purchase in a shop etc.

As someone explained quite well on the internet:

(…) Italian stores and restaurants have a book of “fiscal receipts” issued by the government—and legally, they need to give the customer a fiscal receipt (ricevuta fiscale) for each interaction. Each time they use a ricevuta fiscale, the government knows about the purchase… and the interaction is taxed.

Without issuing that ricevuta fiscale, it’s like the interaction never happened. And, therefore, it’s untaxed.

http://www.revealedrome.com/2012/02/tax-evasion-italy-what-travelers-can-do.html

Tax evasion is a huge problem here in Italy, and the inspections by a specific law enforcement agency (” Guardia di Finanza“) are increasing in order to fight tax evasion.

The brothers on the forum noticed how often Muslim shop owners either don’t issue any “fiscal receipt” at all, or issue it for a lower amount (i.e. Amr pays 8.90 euro at the Islamic butchery, but the butcher issues to him a fiscal receipt for just 5 euro).

Is it sinful according to Shari’ah not to issue a fiscal receipt, or to issue it for a lower amount than the real one?

Are government taxes a form of “oppression” (tax burden in Italy is between 20 and 40%, source) which one has the right to evade, but just being careful not to disgrace himself in front of authorities?

Or is one bound to respect also all financial and tax-related laws due to one’s implicit agreement of respecting the law of the country as soon as it doesn’t order to sin or similarly conflicts with Shari’ah?

Jazakallahu khayran,

Wassalam,

Answer

Wa’alaykum as Salām wa raḥmatullāhi wa barakātuhu,

In principle, Islāmically it is not correct for the government to impose such huge amount of taxes upon citizens. Thus, it will be correct for a Muslim to adopts tax-avoidance procedures whereby he does not pay the full amount of oppressive taxes imposed upon him by the government. However, this must be done in a tactful way so as not to tarnish and harm the image of Islām. For instance, he could issue a fiscal receipt as you have stated, or he can show a lesser turnover in his books whereby he would then be submitting less income-tax.

An important point to remember is that the above ruling only applies to TAX, and not to VAT. VAT taken on the item has to be paid to the government as the VAT that a shopkeeper collects from his customers is basically an Amānah (trust) that is collected on behalf of the government.

And Allaah Ta’aala knows best
Wassalaam,
Ismail Moosa (Mufti)
Iftaa Department,
Euro-Sunni & Islamic Research and Welfare Academy

This answer was collected from Fatwaa.com which is an excellent Q&A site managed by Mufti Ismail Moosa from South Africa. .

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