10 Countries with No Income Tax

James Ryan Jonas

They say that the two things certain in life are death and taxes, but there are several countries in the world where you won’t have to worry about personal income taxes.

The list below identifies a few countries that do not impose income taxes among its people.

Scroll down to find out where they are. Perhaps you might decide to move there in case you want to escape the burden of paying income taxes!

(See also: How to Compute Income Taxes in the Philippines)

10 Countries With No Income Tax

  • 1. Bahamas

Countries with no taxes

This wealthy Caribbean nation derives income primarily from tourism and financial services. Its GDP per capita is around $31,000.

Tourism accounts for over 60% of the Bahamas GDP, but provides jobs for more than half the country’s workforce. Financial services account for more than 15% of GDP.

The Bahamas does not charge income tax, corporate tax, capital gains tax, value-added tax (VAT), or wealth tax. About 70% of government revenue comes from duties and tariffs on imported goods. The country also has a property tax of up to 1%.

Although there are no individual income taxes, employees are deducted 3.9% of their salary (up to $26,000 annually), for social security benefits. The employer counterpart is 5.9% of a worker’s salary. Self-employed individuals are charged 8.8% for National Insurance.

Not bad!

  • 2. Bahrain

Countries with no taxes

Like most Middle East nations, Bahrain relies on oil for income.

Petroleum production and processing is the country’s most lucrative industry, accounting for:

– 60% of total exports;

– 70% of government revenues; and

– 11% of the country’s GDP.

Bahrain’s GDP per capita is around $27,500.

There is no income taxes imposed on individuals, but Bahrain charges indirect taxes such as stamp duty on real estate transfers of up to 3% of the value of the property. Foreign expatriates are also required to pay a 10% municipal tax to rent a residence in Bahrain.

Citizens contribute 7% of their salaries for social security benefits, while expatriates pay 1%. Employers’ counterpart contribution is 12% of a citizen’s income for social insurance and 3% for expatriate employees.

  • 3. Bermuda

Countries with no taxes

Bermuda is is a British Overseas Territory located off the east coast of the United States. Its GDP per capita is one of the highest in world, reaching $97,000.

It is a popular offshore banking destination and is usually chosen by multinational companies as place of registration for tax avoidance purposes.

There are no personal income taxes in Bermuda but revenues come mainly from indirect taxation.

For example, individuals relocating to the country are charged 25% for goods they bring.

Property tax of up to 19% is charged on the annual rental value of a real estate property.

Also, a documentary stamp tax applies to inheritance/estates from 5% to 20% depending on the value of the real estate.

Low taxes may entice workers to relocate there, but the government charges $20,000 for a 10-year work permit in Bermuda.

  • 4. Cayman Islands

Countries with no taxes

Cayman Islands are a British Overseas Territory located in the western Caribbean Sea. It is one of the world’s wealthiest sovereign states, recording a high GDP per capita of $43,800.

The Cayman Islands’ primary industries are tourism and the financial services. The state holds the fifth largest banking center in the world, with banks in Cayman Islands holding more than $1.5 trillion in deposit liabilities.

There is zero income tax, capital gains tax, value added tax, or government sales tax in the Cayman Islands. Wow!

There are also no deductions to an employee’s salary because social security contributions are not mandatory. Employers, however, are required to provide pension plans for their employees, including expatriates who have been working for at least nine (9) months in Cayman Islands.

The islands generate income primarily from indirect taxation. Duty is levied against imported goods, and the tax rates is between 22% to 25%.

All tourist accommodations are charged a 10% government tax, in addition to the $25.00 airport departure tax that all airline passengers pay.  The government also receives income from the license fees of financial institutions that operate in Cayman Islands. Foreign expatriates also pay work permit fees to the government in order to work there.

  • 5. Kuwait

Countries with no taxes

According to the Kuwaiti constitution, all natural resources in the country and associated revenues are government property. Thus, one could expect that Kuwait’s oil industry will be the country’s primary source of revenue.

Indeed, revenues from oil account for almost half of Kuwait’s GDP which reached $164 billion in 2011. This translates to a GDP per capita of $58,000. More than 90% of export revenues and 80% of government income are derived from oil.

Kuwait does not charge personal income taxes, but individuals are required to contribute 7.5% of their salaries for social security benefits. Their employer counterpart is a contribution of 11%.

Only 7% of Kuwaitis work in the private sector, the majority of citizens work in oil companies owned and managed by the government.

  • 6. Monaco

Countries with no taxes

Monaco, a sovereign city-state located on the French Riviera in Western Europe, is one of the wealthiest countries in the world with a GDP per capita of $132,000.

Its main revenues are derived primarily from the tourism and gambling industry. It also has a flourishing banking sector that boasts of over €100 billion worth of funds.

Monaco does not charge any personal income taxes to all residents of any nationality, except French citizens whose residency started after 1957. The French citizens are required to pay French income tax.

Despite the absence of personal income taxes, Monaco charges steep taxes on other fronts.

Corporations are imposed a 33% tax rate, unless shown that three-quarters of company revenues is generated within the confines of Monaco.

Residents also pay a 19.6% VAT on all goods and services. Employees contribute 10%–14% of their salaries to social insurance, while the employer’s contribution is between 28%–40%.

  • 7. Oman

Countries with no taxes

Oman’s GDP per capita is more than $29,000 — around 7 times bigger than the Philippines’ GDP per capita.

Like most countries in the Middle East, Oman relies on crude oil for its revenues.

Oil alone accounts for nearly 70% of Oman’s total revenues. The country’s natural gas reserves are estimated at 849.5 billion cubic meters, ranking 28th in the world. Its proved petroleum reserves amount to around 5.5 billion barrels, the world’s 24th largest.

Although the country does not impose individual income or capital gains taxes, citizens pay 6.5% of their monthly salaries towards social security benefits.

  • 8. Qatar

Countries with no taxes

Qatar is one of the world’s richest countries, with a GDP per capita of around $103,00.

It does not charge citizens income taxes, but that’s not all. It also has zero taxes on dividends, royalties, profits, and capital gains on property!

Similar to the United Arab Emirates (UAE), Qatar relies on income from oil and gas. It owns the world’s third largest reserves of natural gas and charges companies in the oil and gas industry a 35% corporate tax rate.

Citizens of Qatar, however, do pay 5% of their income for social security benefits, while employers contribute 10% for the fund.

  • 9. Saudi Arabia

Countries with no taxes

Saudi Arabia is primarily backed by its oil industry, which accounts for more than 95% of exports and 70% of government revenue. It has one of the world’s highest per capita GDP, reaching $32,000.

A resident individual is not subject to any income tax on salary or employment-related income.

In lieu of income taxes, Saudi nationals are expected to pay the zakat, an obligatory alms giving for all who have the financial capacity. 

For 100% Saudi-owned companies, the corporate tax rate is 0%. For oil and gas companies, the tax rate is a high 85%, while all other companies are charged a 20% corporate income tax rate.

  • 10. United Arab Emirates

Countries with no taxes

The United Arab Emirates (UAE) is another one of select countries in the world that do not charge personal income tax or even capital gains tax. This is because it is one of the world’s richest sovereign nations, recording a high per-capita income of $49,000.

The country relies mainly on money from oil companies that pay up to 55% in corporate taxes. Being the world’s seventh-largest source of crude oil and natural gas, they are bound to earn a lot already from these oil companies. Around 30% of the country’s gross domestic product is directly based on oil and gas output.

The corporate income tax rate for foreign banks is 20%. The UAE also charges high sin taxes: 30% tax on alcohol and an additional 50% sales tax on alcohol sold in Dubai.

Wish you’re living in these countries and enjoying these tax-free benefits?

Sources: KPMG, MSNBC, Wikipedia

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James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.