Q. I read a fatwa on the IslamOnline website concerning buying products of the Goldquest company, which makes such dealing permissible in Islam. I thought that such trading could not be acceptable from the Islamic point of view. Please comment.
Tumkur Khan
A. The Goldquest business relies on tempting customers with a prospect of making money, but the temptation is largely inaccurate. It sells a product at a much higher price than its market value, with a promise that if the customer finds ten new customers who buy the same product from the company, he would recoup his investment.
Finding more customers ensures that he makes a profit. I have answered questions on this sort of business, making clear that it is unacceptable in Islam, because it involves a large measure of deception. It makes the customer a sales representative of the company without paying him any wages. He will only recoup what he had paid for an overpriced product that he might not need in the first place. These new customers will also fall in the same trap.
I have looked at the fatwa on the website mentioned. I can say that the question as put does not properly clarify the situation to enable the scholar issuing the fatwa to give a proper understanding of the problem. Moreover, the scholar made the proviso that the deal should not involve any deception, misrepresentation, false impressions, etc. “because in Islam, business deals must be made on the basis of complete openness and trust.” In the Goldquest business, there is much that is deliberately kept secret and much that is untrue to the customer’s trust. Hence, this sort of dealing is not permissible in Islam.
Zakah and Taxation
Q. If a Muslim country imposes taxation, what should be the attitude of the people? Must they present accurate accounts of their income? Should they abide by the relevant rules? If the same department in government collects both zakah and taxes, could we present our accounts in such a way so that zakah is included in the tax we pay to the government?
Abu Asma
A. We must never confuse zakah with taxation. The two are totally different, and the one cannot be adjusted or even compared with the other. Zakah is an act of worship, imposed by God in the same way as prayer. It is a financial type of worship that aims to reduce poverty and cater for certain important areas of the life of the Muslim community. The way of its distribution and spending is defined by God, which means that zakah funds cannot be spent in other areas, even though they may be urgently needed by the Muslim community. For example, zakah funds cannot be spent to build a road, or train policemen, etc. Taxation, on the other hand, provides a government with funds to carry out a wide range of services. There may be some aspects of such services that could be financed with zakah funds, but the majority of them are not possible to fund in this way, even if we assume that there is surplus of zakah funds, after having paid for all eight areas defined in the Qur’an for its spending.
How can a government finance its different departments, and pay for the services it provides, such as roads and transport, education, health, promotion of agriculture, essential industries, etc? The only way is fair taxation.
People often ask whether Islam allows the imposition of taxes. The answer is that it does. The Prophet (peace be upon him) says: “A duty other than zakah may be imposed on money.” The Prophet does not specify what duty, so as to leave it to every community to determine.
This Hadith allows the imposition of duties that the Muslim community, or its government needs. When such a tax is imposed, should we comply? The Prophet says: “Listen and obey even though your leader may be an African slave with a head that looks like a raisin.” He also says: “A Muslim must obey and comply with orders, unless he is bid to commit an act of disobedience to God.” The payment of tax to fund the services provided by the government falls under the category defined in this Hadith. Therefore, a dutiful Muslim is one who presents his tax returns accurately and pays tax on time. He also pays out his zakah as and when it becomes due.
