Short answer
Yes. When you live in a country, you agree to follow its laws, and Islam requires you to keep your agreements, so you must pay the income, sales and property taxes the law requires. Cheating on taxes is lying and breaking a trust. Using every legal deduction to lower your tax is allowed.
A Muslim must not evade taxes the law requires: it breaks the covenant under which he lives in the country, involves lying, and exposes him to punishment and disgrace. Legal tax planning is permitted. Paying tax does not take the place of zakat.
The four schools agree on this.
Explanation
A visa, residence permit or citizenship is an agreement: you are allowed to live and work in the country, and you accept its laws. The Quran commands, "fulfill all contracts" (5:1), and says every commitment will be asked about (17:34). Classical Hanafi jurists taught that a Muslim who enters a non-Muslim land under its protection may not cheat its people of their wealth.
Haram, because it involves lying or breaking the law:
- Hiding income, including cash work, from the tax authority.
- Inventing expenses or dependants on a tax return.
- Claiming benefits or credits you are not entitled to.
The Prophet ﷺ named lying, breaking promises and betraying trusts as the signs of a hypocrite. A Muslim's word on a signed form should be as true as his word anywhere else. What is allowed:
- Claiming every deduction, allowance and credit the law gives you.
- Retirement contributions and tax-free accounts, within halal investments.
- Giving to registered charities, including zakat, where your country gives tax relief for it.
Zakat and tax are separate. Tax does not discharge zakat, and zakat must be paid in full on top of it; see the zakat calculator. In Muslim countries such as the UAE, the same principle applies: obeying lawful rules is required except where they command a sin. The four schools agree that keeping covenants and avoiding deception are obligatory.
The evidence
Quran, Surah Al-Maaida 5:1
بِسْمِ ٱللَّهِ ٱلرَّحْمَٰنِ ٱلرَّحِيمِ يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ أَوْفُوا۟ بِٱلْعُقُودِ ۚ أُحِلَّتْ لَكُم بَهِيمَةُ ٱلْأَنْعَٰمِ إِلَّا مَا يُتْلَىٰ عَلَيْكُمْ غَيْرَ مُحِلِّى ٱلصَّيْدِ وَأَنتُمْ حُرُمٌ ۗ إِنَّ ٱللَّهَ يَحْكُمُ مَا يُرِيدُ ﴿١﴾
O you who have believed, fulfill [all] contracts. Lawful for you are the animals of grazing livestock except for that which is recited to you [in this Qur'an] - hunting not being permitted while you are in the state of ihram. Indeed, Allah ordains what He intends.
Agreements, including the terms of living in a country, must be kept.
Quran, Surah Al-Israa 17:34
وَلَا تَقْرَبُوا۟ مَالَ ٱلْيَتِيمِ إِلَّا بِٱلَّتِى هِىَ أَحْسَنُ حَتَّىٰ يَبْلُغَ أَشُدَّهُۥ ۚ وَأَوْفُوا۟ بِٱلْعَهْدِ ۖ إِنَّ ٱلْعَهْدَ كَانَ مَسْـُٔولًۭا ﴿٣٤﴾
And do not approach the property of an orphan, except in the way that is best, until he reaches maturity. And fulfill [every] commitment. Indeed, the commitment is ever [that about which one will be] questioned.
Every commitment will be asked about.
Quran, Surah An-Nisaa 4:59
يَٰٓأَيُّهَا ٱلَّذِينَ ءَامَنُوٓا۟ أَطِيعُوا۟ ٱللَّهَ وَأَطِيعُوا۟ ٱلرَّسُولَ وَأُو۟لِى ٱلْأَمْرِ مِنكُمْ ۖ فَإِن تَنَٰزَعْتُمْ فِى شَىْءٍۢ فَرُدُّوهُ إِلَى ٱللَّهِ وَٱلرَّسُولِ إِن كُنتُمْ تُؤْمِنُونَ بِٱللَّهِ وَٱلْيَوْمِ ٱلْءَاخِرِ ۚ ذَٰلِكَ خَيْرٌۭ وَأَحْسَنُ تَأْوِيلًا ﴿٥٩﴾
O you who have believed, obey Allah and obey the Messenger and those in authority among you. And if you disagree over anything, refer it to Allah and the Messenger, if you should believe in Allah and the Last Day. That is the best [way] and best in result.
Lawful rules of those in authority are followed.
Sahih al-Bukhari 33
Sahih... آية المنافق ثلاث إذا حدث كذب وإذا وعد أخلف ...
"The signs of a hypocrite are three: when he speaks he lies, when he promises he breaks it, and when he is trusted he betrays."
False declarations and broken agreements are traits of hypocrisy.
Sahih al-Bukhari 7144
Sahih... السمع والطاعة على المرء المسلم فيما أحب وكره ...
"A Muslim must listen and obey in what he likes and dislikes, unless he is ordered to sin."
Lawful rules are obeyed except where they require disobedience to Allah.
Where the ruling is recorded
- al-Hidaya, Kitab al-Siyar, Bab al-Musta'min. A Muslim under a covenant of safe conduct must not betray the people of that land.
- Radd al-Muhtar (Ibn Abidin), Kitab al-Jihad, Bab al-Musta'min. The duty to keep the covenant of residence.
This answer is pending review by the scholars on our team. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.