The Prophet Muhammad was sent to refine people’s character as well as establish a community based on moral principles. In the power structure he formed, he encouraged public participation, eradicated idol worship in Mecca, and instead constructed places of worship for Muslims. The Prophet also created a comprehensive system of fundamental laws in which the duties of each person was considered to form an independent and unified nation. According to these guidelines, the Prophet succeeded in creating a system grounded on perfect principles in which all believers have equal rights rather than abiding by rules based on tribe, gender, race, or social class. In this part, Prophet Muhammad’s ethical management of the economy in the Islamic state will be studied. The Prophet sought various ways of solving the economic difficulties of the Muslims by maintaining fair distribution of property and wealth through sources of income for Muslims such as zakat (legal charity), spoils of war, khums (the Islamic tax), and tribute.