The ruling concerning paying taxes with usurious money | The official website of Sheikh Muhammad Ali FERKUS
Skip to Content
Thirsday 12 Rabî` Al-'Awwal 1442 H - October 29, 2020 G

Fatwa n° 120

Category: Fatwas about financial transactions- Loan and Exchange

The ruling concerning paying
taxes with usurious money

Question:

What is the ruling regarding paying taxes with usurious money? May Allah reward you.

Answer:

All praise is due to Allah, the Lord of the Worlds. Peace and blessing be upon whom Allah sent as a mercy to the Worlds, upon his Family, his Companions and his Brothers until the Day of Resurrection:

What has to be known is that depositing money in banks is religiously not permissible because this entails contributing to the banks activities in interest-based transactions which are prohibited by religious texts that forbid usury, among which: the verses in which Allah عزّ وجلّ says:

﴿يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُواْ ٱتَّقُواْ ٱللَّهَ وَذَرُواْ مَا بَقِيَ مِنَ ٱلرِّبَوٰٓاْ إِن كُنتُم مُّؤۡمِنِينَ ٢٧٨ فَإِن لَّمۡ تَفۡعَلُواْ فَأۡذَنُواْ بِحَرۡبٖ مِّنَ ٱللَّهِ وَرَسُولِهِۦۖ وَإِن تُبۡتُمۡ فَلَكُمۡ رُءُوسُ أَمۡوَٰلِكُمۡ لَا تَظۡلِمُونَ وَلَا تُظۡلَمُونَ ٢٧٩ [البقرة: 278-279]

The meaning of the verse:

Ô you who believe! Be afraid of Allah and give up what remains (due to you) from Ribâ (usury) [from now onward], if you are [really] believers. And if you do not do it, then be informed of war from Allah and His Messenger but if you repent, you shall have your capital sums. Deal not unjustly [by asking more than your capital sums], and you shall not be dealt with unjustly [by receiving less than your capital sums]﴿ [Al-Baqara: 278-279]. And His saying عزّ وجلّ:

﴿يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُواْ لَا تَأۡكُلُواْ ٱلرِّبَوٰٓاْ أَضۡعَٰفٗا مُّضَٰعَفَةٗۖ وَٱتَّقُواْ ٱللَّهَ لَعَلَّكُمۡ تُفۡلِحُونَ ١٣٠ [آل عمران: 130].

The meaning of the verse:

Ô you who believe! Eat not Ribâ doubled and multiplied﴿ [Âl-‘Imrân: 130]. And other verses and hadiths warning against this forbidden transaction.

However, if his deposited money in the bank brought forth a usury increase; it is incumbent upon him to repent of his injustice which is consuming other people’s money unjustly. His repentance depends on getting rid of the forbidden money which can neither belong to him nor to the bank, but the forbidden money is general which has to be spent on the general utilities as well as on the benefits of the Muslims and their interests, since people who have been subject to injustice in these transactions -usury increase have been cut from their money- cannot be identified. And since this usury increase is considered as general money owned by all Muslims, he cannot pay the taxes -which has unjustly been imposed upon him- with the property of others because “Harm shall be warded off without harm” and “Harm shall not be warded off by similar harm” as it is stated in the general rules.

The perfect knowledge belongs to Allah عزَّ وجلَّ; and our last prayer is all the praises and thanks are to Allah, the Lord of the Worlds, and prayers of Allah are to Muhammad and his Family, Companions and Brothers until the Day of Resurrection.

 

Algiers on: Muharram 20th, 1427 H

Corresponding to February the 19th, 2006 G.