Lowest Tax Countries
Relocating abroad can be motivated by many reasons, including employment opportunities and family commitments. If this is you, choosing a low-tax country can offer significant benefits, notably not spending your hard-earned cash on steep taxes. This article explores the five best places in the world to live from a tax perspective.
Brits living in low-tax countries may choose to invest in stocks. Brokerages are also increasingly paying high interest on cash balances.
5 Lowest Tax Countries For 2024
- Bahamas: 0%
- Saudia Arabia: 0%
- Montenegro: 9%
- Romania: 10%
- Russia: 13%
Tax rates may change. Consult a professional for tailored tax guidance.
1. Bahamas
Like Saudi Arabia, 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 for employers, and Zakat taxes do not apply. From the standpoint of corporate and individual income taxes, the Bahamas is about as good as it can get, hence its popularity among remote workers in recent years.
The only disadvantage the Bahamas has tax-wise is its sales tax, coming in at 10%. 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.
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 the 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.
There is also a small healthcare caveat for businesses. All employers are required to purchase health insurance for their employees. 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.
3. Montenegro
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.
Monthly salaries up to €700 are exempt from tax. Salaries from €701 to €1,000 are subject to a 9% tax rate, whilst earnings from €1,001 are subject to 15%.
This two-bracket tax system is still fairly simple and easy to navigate and gives some advantages to lower-income workers.
Corporate tax rates are also set at 9% of overall earnings. This makes Montenegro an attractive option for companies that wish to set up shop in a low-tax environment.
4. Romania
This former Soviet satellite state may not be most peoples’ first thought when it comes to low-tax countries, but it has one of the lowest tax rates in Europe according to Euronews.
Romania employs what is known as a flat tax system, applicable to anyone living in Romania for 6 months consecutively. This tax is set at 10%, significantly lower than the 42.8% average top personal income tax rate in the EU, whilst corporations are subject to 16%.
The cost of living is also relatively low in Romania. While the actual cost varies by location, Romania is generally about half as expensive as living in most parts of Britain.
That said, there are signs Romania is beginning to tighten its taxation grip, with efforts to increase taxes for those working in software.
5. Russia
Much like Romania, those living in Russia pay a basic flat tax on all of their individual income, calculated at 13% of all income.
If you plan to take advantage of this relatively low tax rate, however, you must become a legal resident of Russia.
Non-residents 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 dollar makes Russia an attractive location for businesses that operate and are paid in American dollars.
That said, geopolitical pressures and sanctions following the 2022 Russia-Ukraine war will make many companies think twice.
Final Word on Low-Tax Countries
While these 5 are some of the best countries in the world to live in from a tax perspective, many other nations 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’re in the process of debating a move to a new country, be sure to spend some time familiarising yourself with the tax rates and policies of that country. We recommend consulting a local tax professional.
This article should not be construed as tax advice.
Article Sources
Russia Tax Rates – Federal Tax Service of Russia