The 5 Lowest Tax Countries to Live in
Once again, most people would not think of Russia as a place in which taxes are low. However, much like Romania, those living in Russia pay a basic flat tax on all of their individual income. In the case of Russia, the flat tax is calculated at 13% of all income. If you plan to take advantage of this relatively low tax rate, however, it is very important that you become a legal resident of Russia. Nonresidents are taxed at a flat rate of 30%, making it impractical for most foreign workers in Russia to hold a nonresident status.Unlike Romania, however, Russia’s flat tax rate does not extend to its corporate taxes. The rate for these is still relatively low, at only 20%. In addition, the traditional weakness of the ruble against the dollars makes Russia an excellent location for businesses that operate and are paid in American dollars.
While Montenegro does not offer the flat tax convenience of numbers 4 and 5 on our list, its tax rates are sufficiently low to make up for it. Up to a monthly gross earning of EUR 720 ($819 USD, given the exchange rate at the time of the writing of this article), the individual income tax rate is 9%. Above this, the rate goes up to 15%, but remains flat afterwards. This two bracket tax system is still fairly simple and easy to navigate, and gives some advantage to lower income workers.
Corporate tax rates are also set at 9% of overall earnings. This makes Montenegro an excellent option for companies that wish to set up shop in a low tax environment.
2. Saudi Arabia
Saudi Arabia is, from a tax perspective, very close to perfect. Not only does it offer a flat tax, but that flat tax is, in fact, 0%. This means that all gross income, both for individuals and corporate entities, is left untouched by the government. From a standpoint of doing business, it doesn’t get much better than tax-free.
For natives of Saudi Arabia, a small Zakat tax of 2.5% is applied to capital assets. Zakat, in Islam, is a type of religious tax that is extended to those who follow the faith, and comprises one of the 5 pillars of Islam. With regards to the cost of business in Saudi Arabia, there is also a small healthcare caveat. All employers are required to purchase health insurance for their employees. The cost for doing this is relatively low, at about $1500 on average per employee. A 22% payroll tax is also applied to Saudi nationals, and is put toward the country’s social security program.
It is fairly difficult to beat Saudi Arabia’s almost nonexistent taxes, but The Bahamas still manage it. Much like the Middle Eastern nation that took position 2 on this list, The Bahamas offers a flat tax rate of 0% on all revenue and income for both individuals and corporate entities. Unlike Saudi Arabia, however, there is no healthcare requirement on employers, and the Zakat taxes do not apply. From the standpoint of corporate and individual income taxes, the Bahamas is about as good as it can possibly get.
The one and only disadvantage The Bahamas has tax wise it its sales tax. Saudi Arabia does not charge a sales tax, but The Bahamas does have a slight one, coming in at 7.5%. This is, however, entirely made up for by the absence of a payroll tax, bringing The Bahamas in at number 1 on the list, if only by a slight advantage.
These 5 are some of the best countries in the world to live in from a tax perspective. However, there are many other nations that also offer low tax rates to both individuals and corporations. Mongolia, the Cayman Islands, and Brunei, for example, all have low tax rates similar to some of the nations on this list. If you are in the process of debating a move to a new country for work or personal reasons, be sure to spend some time familiarizing yourself with the tax policies of that country. Learning tax rates before making a decision to move will equip you with everything you need to know to live and work there successfully, from a tax perspective. Learning what you need to know about the tax system once you have already moved, on the other hand, can cost you more money that you are prepared to lose in taxes.