Country without income tax: is it possible?
Taxes are among the most popular means for a country to make money, and income tax usually plays a substantial role in it. However, some countries do not impose income tax on their citizens and residents. It is possible when a state makes enough money through other means.
Some countries, like Qatar and Kuwait, are rich in natural resources and make an income from their oil and gas trade. Others, like the Bahamas, attract enough tourists to raise substantial money from that sector. Lastly, countries with no income tax for foreigners under the law can also be a government choice to attract investors to the country.
There are currently 14 countries with zero income tax in the world. Among them are the following: Antigua and Barbuda, St Kitts and Nevis, UAE, Vanuatu, Brunei, Bahrain, the Bahamas, Bermuda, Cayman Islands, Monaco, Kuwait, Qatar, Somalia, and Western Sahara.
In addition to countries with zero income tax, there are low-tax regions. This article will also give examples of countries with the lowest tax rates in the world.
Best tax-free countries to immigrate: our experts’ personal choice
Several countries with no taxes are pleasant to live in and easy to immigrate to. After spending 183 days there in a year, you can become their tax resident and enjoy low tax benefits and other advantages. Here are the options we recommend considering.
Antigua and Barbuda. Aside from zero income tax, in Antigua and Barbuda, individuals are also free from paying taxes on wealth, capital gains, and inheritance.
Companies registered as IBCs (International Business Companies) are exempt from paying taxes for 50 years, including corporate tax and tax on income from real estate, securities, and other assets — they only pay an annual fee, depending on the authorised capital size.
However, note that Antigua and Barbuda don't have many tax treaties, most with the Caribbean countries. This means you will still likely have to pay taxes in your other passport country when getting citizenship there.
Antigua and Barbuda is a beautiful island state with pink and white sand beaches, coral reefs and blue lagoons. The islands are famous for their comfortable marinas, and some celebrities love spending time there: for example, singer Eric Clapton and fashion designer Giorgio Armani bought houses there.
Wealthy foreigners may obtain Antigua and Barbuda citizenship by investing $100,000 or more.
The investor must be over 18, with legal income and no criminal record.
Including the family in the application is also possible: a spouse, financially dependent children and parents, and unmarried siblings. Antigua and Barbuda citizenship is not inherited automatically, so an investor has to make sure to add all eligible family members within the first five years of obtaining citizenship.
Aside from the tax benefits, the Antigua and Barbuda passport allows its holders:
- to enter the Schengen countries visa-free and stay there for up to 90 out of 180 days;
- to visit the UK visa-free and stay there for 180 days;
- to get a 10-year B-1/B-2 US visitor visa; and
- to travel visa-free to 150 countries altogether.
United Arab Emirates. Aside from zero income tax, UAE currently has no taxes for legal entities, but they plan to introduce a 9% federal corporation tax for businesses with high net profits. There is also a corporate tax on oil companies and foreign banks.
The Emirates does not offer citizenship by investment, but it is possible to obtain a renewable residence visa by investment from $205,000.
Every foreigner with a residence visa is considered a tax resident in the UAE. But to get a Tax Residency Certificate, one needs to stay in the country for 180+ days. You'll need this certificate if you earn income in another state and want to use a double tax treaty to reduce your taxes there.
The United Arab Emirates offers multiple entertainment and educational facilities, investment options for businesses from all around the world and support for expats from the government. However, as a primarily Islamic country, the Emirates does have rules and traditions to respect: women are advised to dress modestly everywhere, but in the beach area, public displays of affection are generally frowned upon, and alcohol purchasing is regulated.
Vanuatu. There are no taxes on personal income, inheritance, capital gains, and capital export for individuals. Companies can be exempt from corporate and other taxes for 20 years, only paying a $300 annual fee. However, Vanuatu hasn't concluded tax treaties with most of the states globally, so one with a Vanuatu passport or a company may be obliged to pay taxes in another country.
Vanuatu also has the fastest citizenship program — the second passport can be obtained in 1–3 months by investing from $130,000.
The Vanuatu passport allows visa-free entry to 96 countries, including the UK, Singapore, and Hong Kong. It also allows you to apply for a multi-entry 5-year tourist visa in the US. However, Vanuatu citizens will still need a visa to visit Schengen countries.
Saint Kitts and Nevis. There are no taxes on income, dividends, royalties, or interest for residents in Saint Kitts and Nevis. Corporate tax is 33%, VAT is 10 to 15%, and property ownership is taxed at 0.2 to 0.3%.
The islands are famous for their picturesque nature: mountains, rainforests, and beautiful beaches with black volcanic sand. Travellers go to St Kitts and Nevis to sunbathe, dive, go on a yacht along the coasts and try local foods.
Saint Kitts and Nevis citizenship is obtainable by investment of $150,000+. The investor must be over 18, with legal income and no criminal record. It is also possible to include the family in the application: a spouse, financially dependent children and parents, and unmarried siblings.
Regarding visa-free travelling, Saint Kitts and Nevis passport is among the strongest Caribbean ones. It allows one to travel to 157 countries visa-free, including some less accessible ones such as Singapore, Hong Kong, the UK, Ireland, and all of the Schengen countries.
Zero tax countries compared to the lowest tax rate in the world
Malta. An individual's tax rates are progressive, ranging between 0% and 35%.
The Malta Global Residence Programme allows holders to get temporary residence permits. Participants of the Malta Global Residence Programme enjoy a special tax regime:
- 15% on the income earned abroad and transferred to Malta, at least €15,000 per annum;
- 0% on global income not transferred to Malta;
- 35% of the income earned in Malta.
Cyprus’s tax rate varies from 0 to 35%, depending on income. There is no tax on global income and inheritance in the country, and property and income tax rates are low compared to some EU countries. The corporate tax rate is one of the lowest in Europe — 12.5%.
Montenegro. Individuals pay income tax in Montenegro at 9%. Corporate tax is rated the same way.
Montenegro tax residents don't pay interest and royalty taxes. Annual property tax rates range from 0.25 to 1% and are based on the market value of the real estate.
Andorra is among the low-tax countries in Europe. Andorra's basic personal income tax rate is 10% for resident individuals. The Andorran corporate tax rate is also 10%.
Instead of sales tax, a value-added tax is applied to goods and services. In Andorra, the VAT is the lowest anywhere in Europe, with a general rate of 4.5%.
Singapore’s personal income tax rate ranges from 0% to 22%. The standard corporate tax rate in Singapore is 17%.
A partial tax exemption is eligible for the first SGD 300,000 chargeable income. Under this condition, 75% of the first SGD 10,000 chargeable gain is tax-exempt, and 50% of the next SGD 290,000 chargeable income is tax-exempt.
What other countries don’t levy taxes on income?
There are some other countries with zero income tax. It's worth mentioning, though, that none offer citizenship by investment. You can obtain residency by investment in some of them, but it is usually a lot more expensive than getting citizenship or residency in the above-mentioned countries. Moreover, not all these countries are advisable to live in or even visit.
Let us take a closer look at a list of other tax-free countries. Previously, Maldives and Oman were also on this list, but the Maldives has already introduced income tax, and Oman is preparing to do the same.
Other zero income tax countries: overview
| Country | Taxes on individuals and companies, besides zero income tax | The difficulty of immigration by investment | Quick summary of the country’s lifestyle |
| Bahrain | Corporate: 46% income tax — only for companies operating in the gas and oil sector VAT: 10% Property: stamp duty 1.7–2%, municipality tax for rental to expatriates 10% | 🔴 Citizenship — not possible 🟢 Residency — obtainable by investment from $270,000, buying property or being a retiree with sufficient income | Mild winters and hot summers. Almost half of the population are expats. 70% Muslims, so respect for religious practices and local customs is required. |
| The Bahamas | Corporate: the licence for business operation — up to 3% of the turnover VAT: 0–12% Property: stamp duty 1–10%, real property tax 0.75–2% | 🔴 Citizenship — not possible 🟢 Residency — obtainable by investment from $750,000 | Famous Caribbean islands. Warm climate, go-with-the-flow attitude, and large expat community. |
| Bermuda | Corporate: annual company fee based on share capital levels VAT: 0% Property: land tax based on assessed annual rental value | 🔴 Citizenship — not possible 🟡 Residency — obtainable by investment from $2.5 million | Humid subtropical climate, nice beaches, and expensive groceries. |
| the Cayman Islands | Corporate: none VAT: 0% Property: stamp duty 7.5% | 🔴 Citizenship — not possible 🟡 Residency — obtainable by investment from $2.4 million | Warm tropical climate, many international companies, and good healthcare. |
| Monaco | Corporate: up to 33% for companies earning more than 25% of their turnover outside of Monaco VAT: 20% Property: none | 🔴 Citizenship — not possible 🟡 Residency — obtainable by investment from €1 million | “Playground for European elite”: expensive and luxurious living. |
| Brunei | Corporate: 18.5% income tax VAT: 0% Property: varies depending on the municipality | 🔴 Citizenship — not possible 🔴 Residency — not possible | Hot and wet climate. Muslim country — respect for religious practices and local customs is required. |
| Kuwait | Corporate: 15% income tax VAT: 0%, but planning to introduce 5% in 2023 Property: None | 🔴 Citizenship — not possible 🔴 Residency — not possible | Dry, hot climate, relatively safe country, strong Muslim traditions. |
| Qatar | Corporate: 10% income tax VAT: 0%, but planning to introduce 5% in 2023 Property: fees for lease registration | 🔴 Citizenship — not possible 🔴 Residency — not possible | The hot climate and quite strict Muslim traditions regarding dressing, public displays of affection, and drinking alcohol. |
| Somalia | None | 🔴 Citizenship — not possible 🔴 Residency — not possible | Considered a "failed state". A long history of civil war and crimes. Quite a poor and unsafe country to live in. |
| Western Sahara | None | 🔴 Citizenship — not possible 🔴 Residency — not possible | Tax-free because of longstanding territorial disputes. Not safe to live in. |
Is it possible to optimise taxes without moving abroad?
There are several low-tax countries where you can obtain residency or register a company to optimise your taxes — without having to live there for most of the year. Some of the options are listed below.
Cyprus. You can become a Cyprus tax resident if you spend 60+ days a year without spending more than 183 days a year in any other country. Taxes in Cyprus are significantly lower than in many other countries.
Malta. The Global Residence Programme allows one to get a Malta residence permit. The residency entitles you to pay taxes on Malta, which are different from the standard tax rates: for example, if you make an income outside of Malta and don’t transfer it to the country, you don’t pay an income tax on it in Malta.
The investors participating in the GRP pay €15,000+ annually as a tax on foreign income transferred to Malta.
However, make sure to check if your primary country of residence has a double tax treaty with the country you want to move to or open a business in. If there is no such treaty, then instead of tax optimisation, you may end up paying your taxes in both countries.
Summary of zero income tax countries
- There are 14 countries with zero income tax and 4 offer citizenship or residence permit by investment.
- Among the countries with the lowest tax rates in the world are Malta, Cyprus, Andorra, Montenegro and Singapore.
- Aside from zero income tax, in Antigua and Barbuda, individuals are also free from paying taxes on wealth, capital gains, and inheritance.
- Foreigners can obtain Malta or Cyprus residency and register a company to optimise their taxes without having to live there for most of the year.
- Before choosing the country for tax optimisation, check if your primary country of residence has a double tax treaty with the country you want to move to or open a business in.
Frequently asked questions
The most popular alternative sources of income for the country are tourism, trade, or money from international businesses drawn to the country by its low taxes and interesting investment opportunities.
There are currently 14 countries with no income tax in the world. When choosing between them, you should probably consider the lifestyle, the ease of immigration, as well as business and travel opportunities. Some of these countries will grant residency for investment; others may even give you citizenship.
Not necessarily. In some cases, you might become a tax resident in a short period of time, so it’s more of travelling than actually moving abroad. In other cases, you can move your business abroad and decrease your tax load without relocating.
Yes, you will still have to pay taxes in your respective countries. However, if the countries have a double tax treaty, you can avoid paying taxes twice — you will just have to pay it in one country or lessen their amount in both countries.
There are currently 14 countries with zero income tax in the world: Antigua and Barbuda, St. Kitts and Nevis, United Arab Emirates, Vanuatu, Brunei, Bahrain, the Bahamas, Bermuda, Cayman Islands, Monaco, Kuwait, Qatar, Somalia, and Western Sahara.
St Kitts and Nevis in the Caribbean has a tax-friendly environment for its residents. The country charges zero income tax, dividends, royalties, or interest for island residents.
In Antigua and Barbuda, individuals are also free from paying taxes on personal income, wealth, capital gains, and inheritance.
Monaco is a European country with zero income tax for residents. It is possible to obtain a Monaco residence permit by investment of at least $2.4 million.
