Low-tax countries become attractive options for individuals and businesses looking to maximize their potential because of their financial advantages, economic opportunities, and desirable quality of life.

Countries with low taxes become places where your hard-earned money is not burdened by tax obligations from exorbitant personal income tax rates, wealth, and gift taxes. This allows you to keep more of what you earn and paves the way for financial prosperity.

Our guide will take you through 12 countries that have established themselves as tax havens or provide the lowest tax rate for those seeking favorable financial environments in tax-friendly countries. From offering competitive corporate tax rates to personal income tax exemptions and benefits, these countries have crafted attractive tax policies to attract individuals and businesses.

Whether you’re a globetrotting entrepreneur, a digital nomad, or an American expat looking to reduce your living expenses by minimizing your tax burden to the IRS (Internal Revenue Service), keep reading as we list countries with low taxes.

How Taxes Vary in Different Countries

1 million capital gains taxes interest income social security personal income tax savings taxable income tax liability payroll taxes stock options countries in europe property taxes around the world income tax rate many countries value added tax havens tax treaty social security contributions worldwide income countries with the lowest middle east inheritance tax bank accounts us government federal tax rate withholding taxes beautiful beaches tax laws international businesses white sand beaches net profits capital gains taxes 1 million capital gains taxes 1 millionTaxes vary significantly from country to country, reflecting individual tax jurisdictions’ diverse approaches and priorities. One critical factor influencing tax disparities is the structure of a nation’s tax system.

While some countries employ progressive tax systems that levy higher tax rates on individuals with a higher taxable income, others opt for flat tax systems that impose a consistent tax rate regardless of income level. Furthermore, the types of taxes imposed, such as income tax, corporate tax, Value-Added Tax (VAT), or property tax, can differ in rates and applicability.

Countries also provide tax incentives and deductions to tax residents by offering allowances and exemptions for specific expenses or activities, such as travel costs, childcare, and social security contributions. Most countries recognize that a balance is needed to maintain and increase economic productivity and growth.

Additionally, international tax treaties and agreements influence how taxes are levied on cross-border transactions, non-residents, foreign income earned, and revenue generated by multinational corporations. These variations in tax systems highlight the importance of understanding each country’s unique tax landscape to manage personal and business finances efficiently in a globalized world.

No Taxes Over Low Taxes

While countries with low taxes typically impose reduced income tax rates compared to global averages, no-tax countries levy zero income tax and eliminate other taxes, which may include wealth, capital gains, or sales tax. These countries generate enough income through alternative means, allowing tax residents and non-residents to avoid paying taxes.

You’ll often see popular countries among the wealthy, such as Monaco, the United Arab Emirates, and the Cayman Islands, in conversations about zero-income tax countries to consider when moving abroad.

13 Countries With Low Taxes

1. The Cayman Islands

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The Cayman Islands has become synonymous with foreign investors and international corporations looking to avoid paying taxes. In addition to a zero-income tax rate, it’s one of the best tax-free countries for businesses, with a business income tax rate of nil.

The country is home to some of the most highly regarded foreign banks, and companies in the Cayman Islands are subject to a licensing fee, which generates income for the economy.

This appealing tax structure has enabled investors and international companies to increase their wealth significantly while simultaneously protecting it through the country’s well-structured and regulated banking system. While there may be a financial aspect to consider, residing in the Cayman Islands provides access to exceptional standards across various aspects, including healthcare, education, infrastructure, and the pristine preservation of natural surroundings.

2. United Arab Emirates

wealth tax richest countries high standard island paradise monthly income global businesses luxurious lifestyle caicos islands tax incentive tax benefits generally speaking one country most people imported goods public displaysTax rate: Zero percent

In the UAE, local and foreign-earned income, capital gains, and all other forms of personal wealth are tax-exempt. Beyond its advantages for each tax resident, the country has embraced trade liberalization within the Middle Eastern region and globally.

Significant investments in educational facilities, healthcare, business districts, public transport, and entertainment options have transformed the country into one of the most desirable places to live and conduct business without common obstacles.

Regarding businesses, countries in the Gulf Cooperation Council (GCC) implemented a new federal corporate tax system on 1 June 2023. The new corporate tax rate in the UAE has been set at nine percent; however, this is the lowest rate implemented in the GCC.

3. Andorra

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Nestled between Spain and France in the Pyrenees mountains, the Catalan-speaking microstate of Andorra is one of Western Europe’s prime low-tax jurisdictions. The nation’s low-income tax status is held up by an income tax exemption for residents earning under €40,000 (about $44,000 annually).

Corporations in Andorra are also in an advantageous position, with a tax rate mirroring personal income tax of just ten percent.

Concerning additional taxation, Andorra is amongst the lowest in VAT, imposing 4.5 percent on the sale of goods. Despite its location in the center of Western Europe, it has numerous double tax treaties with neighboring countries to maintain its favorable tax environment.

4. Bermuda

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Located in the North Atlantic Ocean, the British Overseas Territory of Bermuda is the ideal foreign country for tax optimization. The Bermudan government doesn’t impose personal income taxes; however, employers and employees are liable to pay payroll taxes.

The tax rate ranges from 0.5 to 12.5 percent, with employees responsible for paying half.

Depending on the industry and position, an employer may absorb the entire payroll tax bill, meaning many working residents in Bermuda avoid paying taxes on their incomes altogether. Additionally, most businesses operating in Bermuda are exempt from corporate taxes.

5. Bahrain

bahrain-natural-resourcesTax rate: Zero percent

Another Gulf tax haven country, Bahrain’s oil wealth has ensured it remains one of the best tax-free countries in Asia for residents and businesses. Unlike the UAE, there is currently no corporation tax in place for firms outside Bahrain’s oil and gas industry.

Corporation tax is still under discussion. Bahraini residents avoid paying all income-related taxes; the only taxes imposed are on selling and purchasing goods, such as VAT, import duties, and land tax.

6. St. Kitts and Nevis

Tax rate: Zero to five percent

St. Kitts and Nevis has established itself as the optimal choice when considering a location that offers a clear and uncomplicated route to low taxes and a second passport.

Compared to other countries offering citizenship by investment programs, St. Kitts and Nevis is amongst the best for tax reduction. The government employs a territorial taxation system, taxing only locally-sourced income. Additionally, income is taxed at a flat rate of five percent.

Businesses also receive favorable tax treatment. Companies are subject to a high 33 percent corporate income tax rate; however, the rate can be reduced to one percent by paying an annual license fee. Additional tax concessions allow businesses with overseas partners to pay taxes on corporate earnings at a significantly reduced rate.

Take a look at our St Kitts and Nevis Citizenship by Investment Ultimate Guide

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7. Bulgaria

working environment in bulgariaTax rate: Ten percent

Bulgaria has garnered a reputation as a country with low taxes due to its universally reduced tax rates, attracting individuals looking to reside in one of Europe’s lowest tax countries. With its flat personal and corporate income tax rate of ten percent, Bulgaria offers one of the lowest tax rates of any European country.

This advantageous tax system has propelled the country’s reputation as an attractive destination for entrepreneurs, investors, and digital nomads.

Additionally, Bulgaria does not impose wealth or inheritance taxes, further contributing to its appeal. The combination of a reduced tax obligation and competitive business costs makes Bulgaria an appealing choice for those looking to optimize their finances while enjoying the benefits of living in a European Union member state.

8. Vanuatu

real estate countries like countries like real estateTax rate: Zero percent (12.5 percent on rental income)

The island nation of Vanuatu is widely recognized for its picturesque tropical beauty and has gained prominence as a tax haven paradise in recent years. With a population of just 300,000, the country is small in size but large in character, and its tax policies make it an ideal country to set up shop.

Despite consisting of a group of small islands, the country generates enough money from alternative sources, such as tourism, the Vanuatu citizenship by investment program, and industrial production, including beef and timber. Based on those measures, Vanuatu has maintained its zero-income tax policies for all employees and corporations.

9. Paraguay

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A country in South America often overlooked for its low tax environment but deserving of recognition, Paraguay’s tax incentives and residence options make it a serious contender for alternative residency. With its territorial tax system, Paraguay imposes taxes only on income generated within its borders.

Furthermore, the maximum tax rate on local income for individuals is capped at ten percent, placing it among the lowest tax countries in South America. Concerning corporation tax, the government imposes a flat rate of ten percent on Paraguayan businesses, one of the lowest in the region.

10. Monaco

real estateTax rate: Zero percent

Monaco is home to the Monaco Grand Prix and some of the world’s wealthiest people. Because of its wealth, Monaco might be considered one of the highest-taxed countries, but it has a reputation as one of the lowest-taxed countries in Europe and around the world.

Monaco has no income or corporation taxes besides corporate taxes on businesses that predominantly operate and generate income outside the state.

While living costs in Monaco may be notably high and the prerequisites to establish residence are demanding, the country’s allure as an ideal destination for wealth preservation holds great significance, particularly for those with substantial financial assets.

11. Western Sahara

Tax rate: Zero percent

The African nation of Western Sahara is seldom found on travel bucket lists, much less one to consider for tax optimization. Nonetheless, understanding low-tax countries in depth will broaden your understanding of global taxation.

Despite the ongoing civil war, Western Sahara has managed to establish diplomatic relations with 42 countries and is recognized as a full-fledged member of the African Union.

Essentially considered a failed state, the country lacks alternative sources of revenue to offset the absence of imposed taxes. Furthermore, territorial disputes, coupled with unstable governance, prevent it from establishing standard economic and criminal laws.

12. The Maldives

Tax rate: Zero to 15 percent

Beyond its heavenly attributes of stunning idyllic beaches and turquoise waters, the Maldives boasts a tax setup that aligns with its paradisical appeal.

There is no oil wealth in the Maldives or the most desirable banking system for offshore banking, but the nation generates substantial income from tourism, thereby alleviating the need to impose heavy taxes on residents.

While it isn’t completely tax-free, the threshold for paying taxes is high at MVR 720,000 (about $47,000), and you will only pay 5.5 percent tax on additional income up to MVR 1,200,000 (about $78,000).

13. Antigua and Barbuda

Tax rate: Zero percent

Antigua and Barbuda is another attractive destination for individuals and businesses seeking tax relief, thanks to its zero-income tax rate. Like other tax-free countries, Antigua and Barbuda imposes no personal income taxes, making it an appealing choice for high-net-worth individuals and expatriates.

The nation’s revenue comes from alternative sources, such as indirect taxes and business-related fees. Antigua and Barbuda has also built a favorable environment for foreign investment by offering economic citizenship through its Citizenship by Investment Program (CIP), which makes it even more appealing to international investors.

In addition to its favorable tax policies, Antigua and Barbuda offers a high standard of living with modern healthcare, reliable infrastructure, and beautiful natural landscapes.

Is it possible to optimize taxes without moving abroad?

It is possible to optimize taxes without moving abroad. There are many strategies that allow individuals to reduce their tax liability legally while staying in their home country.  Here are some common methods:

Maximize retirement contributions

Contributing to retirement accounts like 401(k)s or IRAs (Individual Retirement Accounts)  can lower taxable income. Contributions are often tax-deferred, meaning you won’t pay taxes on the money until you withdraw it in retirement.

Use Tax-Advantaged accounts

Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) allow you to contribute pre-tax dollars for medical expenses, reducing your taxable income.

Take advantage of tax deductions and credits

Claiming deductions like mortgage interest, charitable donations, and student loan interest, as well as credits like the Earned Income Tax Credit (EITC) or Child Tax Credit, can help reduce taxable income and lower taxes owed.

Optimize capital gain

By holding investments for more than a year, you qualify for lower long-term capital gains tax rates. Additionally, offsetting gains with losses (tax-loss harvesting) can minimize investment taxes.

Utilize business deductions

If you’re self-employed or own a business, you can deduct expenses like office supplies, travel, and home office costs to lower your taxable income.

Income shifting and splitting

If applicable, income shifting allows transferring income to family members in lower tax brackets. For example, parents can gift their children money or shift income to lower their family tax burden.

State tax optimization

 Some people live in states with high state income taxes. However, if your job or lifestyle allows, you could work remotely from a state with lower or no state income tax for part of the year without fully moving.

 

How Can Global Citizen Solutions Help You?

Global Citizen Solutions is a boutique migration consultancy firm with years of experience delivering bespoke residence and citizenship by investment solutions for international families. With offices worldwide and an experienced, hands-on team, we have helped hundreds of clients worldwide acquire citizenship, residence visas, or homes while diversifying their portfolios with robust investments. 

We guide you from start to finish, taking you beyond your citizenship or residency by investment application. 

Frequently Asked Questions about Countries with Low Taxes

What country has the lowest taxes?

There is no official lowest tax country, as numerous countries have low or even no taxes. Some countries with low taxes for exapts and citizens include the Cayman Islands, Bulgaria, Bermuda, Paraguay, Monaco, and countries in the Middle East like the UAE, Oman, Bahrain, and Qatar.

Who has the lowest tax rates in the world?

Some of the countries with the lowest tax rates in the world include Malta, Cyprus, Andorra, Montenegro, and Singapore. In addition to having no income tax, individuals in Antigua and Barbuda are also exempt from taxes on wealth, capital gains, and inheritance.

Why is Dubai tax-free?

The UAE has traditionally depended on oil companies to sustain its economy. Substantial reserves in oil and gas, in addition to significant overseas investments, allow the state adequately invest in the country’s infrastructure, education, healthcare, and other quality-of-life factors without increasing its low tax-to-GDP ratio. As a result, this enables major cities such as Dubai to maintain their tax-free status.

Which country is the best to not pay taxes?

There is no one-size-fits-all answer when it comes to finding the best country to not pay taxes. The best depends on individual circumstances and criteria. Several countries are known for their favorable tax systems, such as Monaco, Andorra, the Cayman Islands, and the United Arab Emirates. However, the best option comes down to which taxes you want to avoid; Are you worried about tax on foreign-earned income? Do you own a business and want to eliminate corporation taxes? Are you looking for employment overseas in a zero-income tax country?

These are all factors to consider as taxation across low- and no-tax countries will vary, and the tax regime in one jurisdiction may align better with your specific circumstances than another.

Which EU country has the lowest income tax?

Bulgaria has the lowest income tax rate in the European Union, with a flat tax rate of ten percent. However, Monaco is one of Europe’s few countries with no personal and corporate income taxes for foreigners and citizens.

Which country has the best taxation system?

When it comes to determining the best taxation system, no single solution fits all situations. One taxation system may favor corporations and entrepreneurs, while another will appeal to local employees and retirees. Taxation systems differ across countries, and specific systems may better suit your particular circumstances than others.

Which country has the simplest tax system?

There are numerous ways a country can have a simple tax system. For example, Bulgaria has a flat tax rate for both individuals and businesses, meaning there’s less confusion about what percentage of income is owed in taxes; Other countries, such as the UAE and Monaco, have adopted a tax setup that exempts individual residents from tax obligations, so their tax systems could be considered the simplest as it alleviates the need for residents to file taxes altogether.

A simple tax system in countries with low taxes can also encompass the provision of online tax filing options that require minimal steps and prerequisites to avoid unnecessary tax penalties or back taxes. Streamlining the online filing process with the fewest requirements adds to the overall simplicity of the taxation system.

Which country has the highest taxes in the world?

The country with the highest taxes in the world is the Ivory Coast, which imposes a 60 percent income tax.

How do countries without income taxes generate revenue?

Countries without income taxes generate revenue through alternative means like value-added tax (VAT), corporate taxes, and import/export duties. They may also rely on tourism, natural resources (like oil or gas), and fees for services such as real estate or business registration to fund government operations.