Question: I am having some building work done at my house. The builders have recommended paying for the labour costs in Cash thus saving on the Value Added Tax. Am I allowed to pay cash knowing that it’s cheaper as I save on VAT? If not, to what extent do we need to go to to ensure VAT is paid i.e. avoiding cash in hand?
I hope you’re doing well, insha’Allah.
No, this would not be permitted. A Muslim obeys the laws of the land—and these include “working above the table” and paying the required taxes for goods and services.
Allah Most High commands, “Believers, fulfill your commitments” [Qur’an, 5.1].
The Messenger of Allah (peace & blessings be upon him) said, “Muslims uphold their commitments” [Abu Dawud].
And Allah is the giver of success and facilitation.
[Shaykh] Faraz Rabbani
Shaykh Faraz Rabbani spent ten years studying with some of the leading scholars of recent times, first in Damascus, and then in Amman, Jordan. His teachers include the foremost theologian of recent times in Damascus, the late Shaykh Adib al-Kallas (may Allah have mercy on him), as well as his student Shaykh Hassan al-Hindi, one of the leading Hanafi fuqaha of the present age. He returned to Canada in 2007, where he founded SeekersGuidance in order to meet the urgent need to spread Islamic knowledge–both online and on the ground–in a reliable, relevant, inspiring, and accessible manner. He is the author of Absolute Essentials of Islam: Faith, Prayer, and the Path of Salvation According to the Hanafi School (White Thread Press, 2004.) Since 2011, Shaykh Faraz has been named one of the 500 most influential Muslims by the Royal Islamic Strategic Studies Center.