Riba-based Investment Certificates
Fatwa No: 381856

Question

A person who lives on "house rent" pays zakat and other taxes regularly. On top of those, he has to pay a large sum as income tax. That income tax would become only 1/4th if he buys government saving certificates. Will it be permissible for him to buy those certificates only to get the tax rebate, if he leaves RIBA or gets rid of it by giving to the poor?

Answer

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

First of all, it should be mentioned that it is neither permissible for the government to issue Riba-based investment certificates nor to entice people to buy them in exchange for tax reductions. It is also not permissible for the government to impose taxes on people without an Islamically legitimate reason.

Additionally, it is not permissible for people to buy these forbidden investment certificates on the pretext of avoiding imposed income taxes or reducing them, even if they were purchased with the intention of ridding Riba (interest and/or usury) and spending it on the poor. A good intention does not render what is forbidden permissible. Indeed, it is not permissible to engage in Riba without a dire necessity.

Allah knows best.

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