Avoid tax using off shore payment

15 Feb 2019 Ref-No#: 1372

Salaam alaikum.
I live in europe. Each year I have a to pay tax on my income. Here tax is quite high but Alhamdulillah I am always paying. I work full time here however lately I am struggling financially. So this year I made an arrangement with my employer which is as follows:

I will work for my current company for 3 days a week. And 2 days I will be on leave. They will pay me normally for these 3 days.
However the 2 days that I am officially on leave I will also work for them but as a outsourced employee via another company not in europe (Note. that is my brothers company in which I have a share). For these 2 days they will pay that outside company and eventually I will get that money. This arrangement will allow me to avoid tax on 2 days as it is being paid to a outsource company.
My question is – is it permissible for me to not declare these 2 days income that I have earned via this arrangement?

I have another question regarding tax. I am software engineer. Sometimes I work on some projects from home at weekend/night. I also earn some money from these projects as well. Is it permissible for me if I do not declare these earnings while submitting tax?

Here some people do transaction on cash basically to avoid tax. In such case shall I refuse to do transaction with such people?

Jazak Allah Khair

Answer

Wa’alaykum as Salam wa rahmatullahi wa barakatuhu,

The government uses the taxes in avenues which benefit the tax payer, such as education, social security, health care etc. Hence a citizen of any country is bound to accept the laws of the land, and pay his taxes.

There is a differance between using a strategy to get tax rebates and concessions, and between avoiding paying taxes all together. The former is legal, and the revenue services accept this. This is Islamically valid as well. Working two days for an offshore company and getting payment thereafter could fall under this depending how exactly you go about doing this. You may discuss with an accountant / tax advisor, and see how you can legally work around the tax.

However, not paying taxes is different, and the government will penalize a person found guilty of this offence. Islamically too, this will not be correct. Taking cash payments and not declaring them will fall under these.

References

مطلب في وجوب طاعة الإمام (قوله: افترض عليه إجابته) والأصل فيه قوله تعالى {وأولي الأمر منكم} [النساء: 59] وقال – صلى الله عليه وسلم – «اسمعوا وأطيعوا ولو أمر عليكم عبد حبشي أجدع» وروي «مجدع» وعن ابن عمر أنه – عليه الصلاة والسلام – قال «عليكم بالسمع والطاعة لكل من يؤمر عليكم ما لم يأمركم بمنكر» ففي المنكر لا سمع ولا طاعة ثم إذا أمر العسكر بأمر فهو على أوجه: إن علموا أنه نفع بيقين أطاعوه وإن علموا خلافه كأن كان لهم قوة وللعدو مدد يلحقهم لا يطيعونه، وإن شكوا لزمهم إطاعته، وتمامه في الذخيرة (رد المحتار- 4/ 264)