What countries are tax free
Countries with no income tax
By: Caitlyn Ng
Believe it or not, there are a few havens left on Earth that do not impose heavy income taxes on you. If you’re wearied from the local news of hikes here and there, read on to find out more about these places.
However, these countries aren’t fully tax-free either. They do have various other taxes, some of which are pretty steep (probably to make up for their early-on decision to do away with income tax). Welcome to the world where everything is fair and where the grass may not be as green on the other side as they make it out to be. Be prepared for a surprise entry!
Gaining independence in 1971, Qatar has gone on to become the number one country in the world in terms of richest country per capita, with a GDP of over $100,000 (in terms of the current international dollars, $, for easier comparison).
With an absolute monarchy ruling them, they depend on their natural gas and oil reserves (which so happens to be the third largest in the world) for a majority of their revenue. With the oil accounting for more than 30% of the GDP, approximately 80% of export earnings and 58% of government revenues, is there any doubt that this country is able to sustain itself without taxing the income of their citizens? In addition to not taxing the income of its citizens, it also does away with taxes on profits, dividends, capital gains, royalties and property.
Before you get into a tizzy, and book the first one-way air ticket to Qatar, there is one thing which the citizens have to pay for though. 5% of their income goes to the national social security benefit fund, with their employers helping to contribute another 10%. The cost of living there is also considerably high, with properties rented out for as high as RM10,000.
2) Saudi Arabia
Officially the second largest state in the Arab world (after Algeria), this country is also known as the Kingdom of Saudi Arabia and has been an absolute monarchy with no national elections ever taking place since the country’s creation.
While they get to enjoy the second largest oil reserves and the sixth largest natural gas reserves in the world, they are also the 19th richest in terms of GDP worldwide, making them truly a force to be reckoned with. To add one more feather to their already-feathered hat, they are also the world’s top oil exporter (the figures of which make up more than 95% of exports and 70% of government revenue), which puts them firmly on the National Power list as one of the top 20.
However, the Saudi Arabians are required to contribute 9% from their income for the national social security benefit fund as well as having to pay the capital gains tax of 20%, which means that any non-inventory asset they sell would have to be up for levying. An example would be if they sold a house worth RM1,000,000 then they would only be able to pocket an amount of RM800,000.
3) The Bahamas
Mention the name “Bahamas” and what comes to mind? Clear blue skies, calm lapping seas, warm golden sand, shiny hot sun. Vacation, here we come! But no, this article is about income tax, not a vacation.
The funny thing is, income tax is tied in with this country as the Bahamas makes the list as one of the countries in the
world who do not levy taxes on the citizens’ income. As if you needed another reason to love that country more, after the United States and Canada, it is also one of the richest countries in the Americas in terms of GDP per capita. They also rank 27th on the list of countries measured by GDP per capita.
Locals still have to pay for a property tax of up to 1% as well as 3.9% of their salary for a form of the country’s social security fund called National Insurance, but the good thing is that there’s a maximum limit set at RM100,604. Being a breathtaking ecological oasis that boasts the clearest water on Earth and having been called “Paradise” many times over by people who have visited the archipelago, surely those taxes are a small price to pay for living in a haven?
They don’t have a slogan saying “It’s Better In The Bahamas” for nothing.
4) Cayman Islands
The Cayman Islands also possess spectacular beauty, on par with the Bahamas, but they are more famously known for being a major offshore financial centre where the world’s wealthy converge upon to luxuriate in the beautiful weather and lush surroundings.
In addition to that, this country also has no capital gains tax, no corporation tax and no mandatory social security contributions. How’s that for an almost-perfect country?
This British Overseas Territory is made up of three islands: Grand Cayman, Cayman Brac and Little Cayman. They are able to gain revenue from indirect taxation, such as import duties of 5% to 25% for goods brought to the islands. With such fantastic exemptions and proper care of the people by the government, it’s no wonder that the locals have the highest standard of living in the Caribbean. The Cayman Islands also can be found in the top 20 on the list of countries with high GDP per capita, coming in with $43,800 (using the current international dollars, $, for easier comparison).
5) Brunei Darussalam
And here is our surprise entry! Our oil-rich neighbouring country which is nestled in between Sarawak’s borders also makes this list as a country that does not impose taxes upon its citizens’ income.
There is, however, the requisite contribution to the social security fees where all the citizens are required to chip in 5% from their income. In addition to that, the citizens also have to pay 3.5% to a pension scheme, both of which are matched by their employers.
With the discovery of natural oil and gas resources in 1929, it rapidly became the basis of Brunei’s development and revenue, making this country the fourth largest oil producer in Southeast Asia. About 90% of its GDP is derived from those natural resources but the government does obtain substantial income from overseas investments to supplement the national fund. In terms of GDP per capita, Brunei makes the top 10 of the list, coming in at number 5 according to the IMF with over $54,000.
If you’re already planning an escape to one of these countries, my advice to you would be one word: THINK. Sure, there aren’t any personal income taxes, but have you taken other factors into consideration (such as the massive cultural differences and the political stability) before you book that one-way ticket out?
Caitlyn Ng is an Investigative Journalist of SaveMoney.my , an online consumer advice portal which aims to help Malaysians save money through smart (and most of the time painless) savings in their daily banking, technology, and lifestyle spending habits.Source: www.freemalaysiatoday.com