salam. pls reply early. is it allowed to lie and understate sales to avoid paying vat? vat is not like other taxes. the government requires businesses to collect a certain percentage of the sales price of the goods from customers. this raises the price of the good and the business falls behind in competition as he cannot raise his profit by going beyond the market price. can the businessman collect vat from some customers to fulfill the minimum legal requirement and do cash transactions with other customers?

All perfect praise be to Allah, The Lord of the Worlds. I testify that none is worthy of worship except Allah and that Muhammad is His slave and messenger.

We cannot authoritatively say that tax evasion is permissible or prohibited as a general rule to be applied in all contexts and situations. Rather, the ruling depends on the type of imposed tax; if it is fair and rightful, then it is impermissible to evade paying it; but if it is unfair and wrongful, then it is permissible to evade it. This can be determined by competent experts in this field who can decide whether or not the public resources are insufficient to meet the needs of the Muslim community and interests of the people, and so such taxes are levied to meet these needs and tend to these interests. If this is the case, then it is impermissible to evade this type of taxes by this trick or any other, because collecting these taxes is entailed by the public interest which all people have to cooperate in fulfilling and realizing.

However, if these taxes are unfairly imposed and levied by the authorities, and there is no real need for them or they are not spent for fulfilling legitimate rights, then there is no sin in evading them to escape such injustice and ward off harm to the best of one’s ability.

Therefore, you should examine the nature of those taxes and identify the type to which they belong from the two types mentioned above. You may ask the competent experts in economics and related fields in this regard. As for increasing the price of the commodity for some customers, there is no sin in doing so. It is not obligatory on a trader to sell his commodity at the same price to all customers; rather, he may charge customers different prices for the same commodity, depending on the mutual agreement between him and the buyers.

For more benefit on evading taxes, please refer to Fataawa 316597, 203644 and 129786.

Allah Knows best.