Islam Question and Answer - He did not register the sale of a piece of land so as to avoid paying taxes

Mon 6/12/1430 - 23/11/2009

» What should be done if Eid coincides with Friday.

» The time for udhiyah (sacrifice).

» Guidance of the Prophet (peace and blessings of Allaah be upon him) regarding Eid prayers.

» He forgot to fast the third day during Hajj and fasted it after he returned home.

» Ruling on Eid prayers .

» For how many people is the udhiyah sufficient?.

» Ruling on fasting the days of al-tashreeq.

» He wants to offer naafil prayers after praying Zuhr and ‘Asr in ‘Arafah.

» Is it haraam to buy and sell after the farewell tawaaf?.

» Refutation of those who say that women should not pray Eid in the mosque.

110763

Principles of Fiqh » Jurisprudence and Islamic Rulings » Transactions » Business and Financial Transactions

He did not register the sale of a piece of land so as to avoid paying taxes

I liked a piece of land in my country and I wanted to buy it (through an agent) in installments because I did not have its entire price then. The landowner refused to sell it on installments. The agent then offered me that he will pay the price then I will buy it from the agent himself and I agreed. The agent then paid the price to the landowner then sold it to me. The one who gave the land up to me is the owner not the agent and the reason for this is that in our country if a person buys a piece of land he has to pay 10% of its price to the state. So if the landowner sold this land ‘formally’ to the agent then the agent sells it ‘formally’ to me; I would have been obligated to pay 95000 SR to the state. What happened in our case is that the agent bought the land from its owner ‘informally’ then the landlord will sell it to me ‘formally’. Thus we will pay 45000 to the state.
I know it is not permissible for a person to sell what is not in his possession. But this happens a lot in our country because of this tax matter. I mentioned how much tax I would pay so that you appreciate how much the state takes from us. The first selling process (from the owner to the agent) happened informally to avoid paying tax. The agent did not increase the price of the land. He will sell it to me in installments for the same cash price of it. Is what we did impermissible? Are we excused to avoid paying tax? If what we did is a sin then what shall I do? Shall I get rid of it?.

Praise be to Allaah.

Firstly:

What the agent did of buying the land for cash then selling it to you for instalments, is a valid translation and there is nothing wrong with it. It is not a condition of validity that the sale be recorded or written down; rather if the proposal and acceptance are done, and the owner gives up the land and the agent takes it then sells it to you, then he has sold what he owns, praise be to Allaah.

In this case the agent may sell the land for a price by instalments that is higher than the price for cash, but he has done well by not charging you more.

Secondly:

It is haraam to charge tax (mukoos) on land and other things, and it is prescribed to avoid them by all permissible means that will not result in greater evil.

Your purchase of the land is valid and there is no sin on you in sha Allaah.

See also the answer to questions no. 82111 and 39461.

And Allaah knows best.

Islam Q&A