The Islamic View of paying VAT in the United Kingdom

The Islamic View of paying VAT in the United Kingdom


Assalamualaikum wrwb, If someone owns a business in which they sell appliances. When they purchase these appliances to sell, the VAT is paid back to the business. If family come to purchase appliances from them, are they allowed to purchase at the price without VAT (cost price)?


In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Value Added Tax (VAT) is levied on the seller of most goods and items in the United Kingdom and collected by the HM Revenue and Customs according to the Value Added Tax Act of 1994. VAT is paid over the seller to the Government after charging such tax to the customer on behalf of the Government.

Muslim citizens living in a non-Muslim majority country should abide by the rules and regulations adopted by the Government as long as they not un-Islamic. The Government has a mutual pact with the citizens of the state to provide certain public and private services such as healthcare, infrastructure and security. These services are not expected to be provided free of charge and the Government requires the mutual co-operation and contribution of its citizens to ensure a smooth and efficient operational management of the State. The issue of taxes falls squarely on the citizens of the State as this represents a joint mutual pact between the State and the citizens. 

As Muslims, we should not place ourselves in an uncomfortable situation that could impact our own integrity and honour. A Muslim should protect his integrity and honour. We should be extremely cognizant of this especially when living in a majority non-Muslim country. 

Therefore you should charge the VAT to your family members and pay such funds over to the Government as the indirect tax agent of the HM Revenue and Customs. In any event, you would have claimed the VAT paid to the seller from the Government in the first place and the VAT you charge to the purchaser will be a set off of the initial VAT that you claimed from the Government. 

and Allah Ta'ala Knows Best

(Mufti) Ismail Desai
Chairman of Shariah Board and Fatwa Committee
Darul Iftaa, Durban, South Africa

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