Ways to minimise taxes for a business

Registering a company in the country of second citizenship or residency might help to optimise taxes. Learn more about taxes for legal entities in the Caribbean, Vanuatu, Europe, and the Middle East.

Corporate and other taxes for businesses in the Caribbean

International Business Company (IBC) is a form of a company in the Caribbean. It is suitable if the investor’s business is focused on working with counterparties outside the country of registration. IBC is often chosen by investors who obtain Caribbean citizenship by investment.

A company becomes a tax resident of a Caribbean country if registered, managed or controlled there. In this case, it is subject to tax rates for local companies.

Taxes for companies. Legal entities that are non-residents pay taxes only if they generate income on the Caribbean country’s territory. Tax rules for resident companies vary by country.

Taxes for resident companies of Caribbean countries

Country

Taxes and fees

25% of the profit — a tax on global income

15% — the standard VAT rate

0% — a withholding tax on dividends, interest and royalties

6% of salary — social contributions

25% of the profit — a tax on global income

15% — the standard VAT rate

0% — a withholding tax on dividends, interest and royalties

7% of salary — social contributions

28% of the profit — a tax on global income

15% — the standard VAT rate

0% — a withholding tax on dividends, interest and royalties

4% of salary — social contributions

33% of the profit — a tax on global income

17% — the standard VAT rate

0% — a withholding tax on dividends, interest and royalties

6% of salary — social contributions

30% — a tax on income earned in St Lucia from commerce, rent, interest, or royalty

12,5% — the standard VAT rate

0% — a withholding tax on dividends

10% — a withholding tax on interest and royalties

5% of salary — social contributions

A preferential tax regime for IBCs operates in Antigua and Barbuda. They are exempt from taxes on income, dividends and interest from foreign sources for 50 years.

IBCs are usually not allowed to buy real estate, so they do not pay taxes associated with purchasing, selling and owning property.

Tax agreements. Caribbean countries have fewer double tax treaties than European countries, most of which are usually concluded within the Caribbean Community (CARICOM). Therefore, it may be beneficial for a business owner to change their country of tax residence to minimise the tax burden.

Vanuatu corporate tax rate and other taxes for businesses

International Business Company (IBC) is the most popular legal form of business among foreign investors in Vanuatu. Such a company can only operate abroad.

IBCs aren’t allowed to buy real estate in the country, offer the country’s residents to buy shares or make a contribution. Also, IBCs cannot obtain a licence to engage in insurance, banking or trust business.

An IBC must have a registered office or official representative in Vanuatu. It must also have a director and at least one shareholder; their names aren’t disclosed. There are no capital or currency requirements.

Taxes and fees for IBCs. The registration fee is $150; the annual fee is $300. No filing or reporting is required. These benefits are available to foreigners who acquire Vanuatu citizenship by investment.

There are no taxes on profits, personal income and capital gains for companies and their shareholders that don’t receive income from sources in Vanuatu. There is neither inheritance, gift taxes, or stamp duty on any transactions except for purchasing property in Vanuatu.

IBCs benefit from tax incentives for 20 years.

Vanuatu doesn’t have double tax treaties with other countries. If an investor registers a company in Vanuatu but remains a tax resident of another state, they will pay an income tax at the country of tax residence rates.

Portuguese legal entities pay quite high taxes. But they can minimise the tax burden if they register a company in Madeira or the Azores.

The corporate tax rate is 21% on the mainland and 14,7% in Madeira and the Azores.

In some cases, the tax can be significantly reduced: for example, companies with licences from the International Business Centre of Madeira (IBCM) pay income tax at 5%.

The standard VAT rate is 23% in Portugal. But it can be significantly reduced depending on the type of goods and the region: for example, the VAT rate on food and medicine in the Azores is 4%.

Other taxes. Capital gains are taxed at 28%. The tax on dividends for Portuguese resident companies is 28% and 25% for non-residents.

Social contributions for employees of commercial companies amount to 23,75% of the employee’s salary.

The stamp duty rate ranges between 5% to 10%, depending on the transaction type.

Portugal has double tax treaties with more than 80 countries. DTTs allow business owners to minimise the tax burden on income received from abroad or transferred to another country.

An entrepreneur can get a Portugal residence permit, for example, by investing and creating jobs or opening a start-up in a business incubator.

UAE taxes for businesses

Entrepreneurs from other countries register companies in the United Arab Emirates to optimise business taxes.

The corporate tax will be levied at 9% from June 1st, 2023. Companies with an annual profit of at least AED 375,000 ($102,100) will pay the tax. Until the rule enters into force, the corporate tax rate for most companies is 0%.

Dividends and capital gains are not subject to tax.

High tax rates apply only to specific legal entities. For example, foreign companies engaged in oil and gas exploration and production pay a corporate tax of 55%.

The standard VAT rate is 5%. Only companies with an annual profit of at least AED 375,000 ($102,100) must register as VAT payers.

Registration of a company in a Free Zone allows the owner to minimise taxes and not pay the corporate tax, VAT and customs duties for up to 50 years after the company’s registration.

There are 45 Free Zones in the UAE, most of which are in Dubai. Registration of a company in one of them allows the owner to do business with international partners and operate on the territory of the selected zone.

You cannot get a Golden Visa in the UAE by investing in a company. The program only offers real estate investment options.

Highlights: how to optimise taxes for a business

  1. A second citizenship or residence permit helps to register a company abroad to minimise taxes.

  2. As a rule, a company can become a tax resident of a country if registered there or managed from the state’s territory.

  3. Corporate taxes start at 25% in Caribbean countries. But there are special conditions in some countries. For example, in St Lucia, legal entities pay corporate tax only on profits from activities performed in the country. In Antigua and Barbuda, International Business Companies may not pay taxes on income, dividends and interest from foreign sources.

  4. Vanuatu has incentives for International Business Companies: they are exempt from most taxes for 20 years and only have to pay an annual fee of $300.

  5. In Malta, shareholders can recover up to 100% of the corporate tax paid by the company.

  6. UAE companies with an annual profit of at least AED 375,000 ($102,100) will pay a corporate tax of 9% from June 1st, 2023. Until then, most companies are tax-free.

  7. Registration of companies in free economic zones helps to minimise taxes for businesses in Portugal, Turkey and the UAE.

Albert Ioffe

Material prepared by Albert Ioffe, Legal and Compliance Officer

Updated:
April 27, 2024

Frequently asked questions

  • Which Caribbean countries have no capital gains tax?

    There is no capital gains tax in the Caribbean countries.

  • Do Caribbean countries have 0% corporate tax?

    Caribbean countries don’t have 0% corporate tax for companies registered and controlled in the Caribbean. In this case you need to pay corporate tax on net profit earned both in the country and abroad. The only exception is St Lucia. There you pay corporate tax only on the income earned in the country.

    Non-resident companies pay corporate taxes only if they earn money in the Caribbean.

  • How much is corporate tax in UAE?

    Right now the UAE doesn’t have corporate tax. However, it will introduce one in June 2023. The rate will be 9%. Only the companies that have an annual profit of $102,100 will need to pay the corporate tax.

  • Is Turkey a tax haven country?

    Yes, Turkey can be called a tax haven. If the company is registered in one of the free zones it is exempt from income and corporate taxes, stamp duties, real estate and property taxes.

    VAT rate in Turkey is 18%. However, it can be reduced to 1% and 8% for deliveries and services.

  • Do foreigners pay taxes in Turkey?

    Yes, both residents and non-residents of Turkey pay taxes on income, dividends, interests, inheritance and gifts. There are also social security and unemployment insurance contributions. However, wealth is not subject to taxation.

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