Countries with Low or No Income Taxes

Imagine living in a country where you do not need to pay personal income tax, or where the tax burden is low, though with some conditions. Generally, these countries are known as tax havens. Considering this, there are certain countries with stable economies worldwide. Hence, their government does not collect taxes from its citizens. Further, these nations are ideal choices for people looking to optimize their tax burdens.

Want to know about these countries? In this blog, we have listed the low or tax-free countries for you to discover. So read on and gather information about them.

List of Tax-Free and Low-Income-Tax Countries in the World

Here is the list of tax-free and low-income tax countries in the world:

The Bahamas

The Bahamas is popular as a global tourist hotspot, known for its luxurious lifestyle and pristine beaches. Among the tax-free countries list, it holds a top place. Here to enjoy tax-free benefits, holding the citizenship of the country is not mandatory. Considering this, to get permanent residency, at least a 90-day stay in the nation is sufficient. 

Although you can simply obtain a residency here, it comes with a high price tag. With a modest fee of $1000, you can obtain a permit for temporary residence. However, if you want long-term stays in the country, you need to invest a minimum $750,000 in real estate. This makes you qualify for permanent residency. 

While this country is a tax haven for NRIs and expats, the living expenses are higher. Apart from VAT tax revenue and stamp tax revenue, to maintain your lifestyle, you need to look for financial options. Further, for those looking for a combination of sand, sun, and tax benefits, the Bahamas is still an attractive travel destination. 

Bahrain

In the Persian Gulf, Bahrain was one of the first states to discover oil within its borders. This further transformed this Gulf state into one of the richest nations in the world. Additionally, it has also become one of the countries without taxes in the world. While you can simply live in Bahrain. However, obtaining permanent residency is quite challenging.

Considering this, to obtain residency, you either need to invest a sum of $530,000 in property, earn a monthly income of more than $5300, or be retired from your job. Also, getting citizenship in Bahrain is more difficult. To obtain it, you need to live there for 25 years and get fluent in Arabic. Further, in the Gulf, for a tax-free permanent residency, Bahrain is a viable option. 

Bermuda

Situated in the North Atlantic Ocean, Bermuda is known for its pink-sand beaches and tax system, drawing wealthy businesses and individuals alike. The country has a population of only 64,000 residents. 

Though here you cannot get permanent residency or citizenship-by-investment, with a short-term permit visa, you can live here for a maximum of six months. However, if you stay here for a longer time, work permits are issued for 1 to 5 years, with the possibility of extension.

Although Bermuda is one of the countries with zero income tax, it is vital to note that payroll taxes are imposed on employers. Considering this, employers are responsible for deducting 9.5% from their employees' salaries. Additionally, self-employed individuals handle their own tax obligations. Further, while the country offers beach living with zero tax obligations, the cost of living here is relatively high. 

United Arab Emirates (UAE)

In the Index of Economic Freedom, the United Arab Emirates (UAE) ranked as the 22nd economic powerhouse region. Among the several oil-producing Middle Eastern countries with zero taxes, the UAE is the most economically and politically stable one. For those looking for income tax freedom, the country is a favorable choice. It is because it does not impose any capital gains tax, inheritance tax, or personal income tax.

However, the UAE charges 5% VAT on most goods and services retailed here. Additionally, with a flourishing economy and multicultural environment, the UAE also has of quality education system and a strong healthcare network. Further, for residency options, you can select from retirement and investor visas.

Qatar

At first glance, Qatar looks similar to its other neighbouring countries in the Arabian Gulf. The country provides a unique combination of rapid modernization and traditional culture. Globally, this oil-rich, small nation generates one of the highest per capita incomes. Additionally, in the Middle East, Qatar is stated as the most developed nation.

Apart from this, in regional and international politics, the country plays a key role. The rapid development and growing influence of the country make it a fascinating nation to discover.

Further, despite the strict permanent residency requirements of the country, Qatar stands out from its neighbours by providing this option to travelers. However, due to limited layers in the country, obtaining permanent residence is quite difficult. Moreover, to obtain residency, you need to live in the country for more than two years and get fluent in Arabic. 

Switzerland

Among other European countries, Switzerland is often stated as one of the most prosperous and stable nations. The country is popular for its established banking sector and strong economy. For both retirees and investors, the country offers residency permits. 

The income tax of the countries varies by canton, with a federal tax rate up to 11.5% and its average corporate tax rate of approximately. 14.9%. With one of the lowest tax countries in the world, Switzerland is an attractive option for global businesses and entrepreneurs looking for both fiscal and security efficiency. 

Additionally, the country offers long-standing political neutrality and excellent infrastructure, ensuring a moderate and safe living environment. 

Cayman Islands

Popular for its beautiful beaches, the Cayman Islands' economy remains dependent on tourism. There are no direct taxes imposed on individuals, such as capital gains, income, or corporate tax. Considering this, the Cayman Islands has long been stated as a tax haven and offers tax-free benefits. 

Further, to get the residency permit, you generally have three options. These are as follows:

• Starting a business on the islands
• Working for a Cayman Island-based company
• Having a significant investment in the islands

Considering this, to obtain residency on Grand Cayman, you should earn at least $147,000 annually. Additionally, should make a minimum investment of $1.2 million in local businesses or real estate. After an eight-year waiting period, you can obtain permanent residency. 

Dominica

Encompassing estate, corporate, and withholding taxes, Dominica stands out among tax haven countries. Additionally, the country also exempts foreign-earned income, inheritance, and gifts from taxation. 

The nation's legislative framework supports the establishment of trusts, offshore foundations, and corporations. This further offers tax-friendly and privacy-protected offshore banking services. Considering this, people of any country can open offshore corporations, covered by the laws of Dominica that protect the identity of directors and owners. Moreover, regarding the confidentiality of offshore account holders, the country refrains from sharing details with foreign tax officials.

However, like other tax haven countries, Dominica has also faced international pressure to improve transparency and tackle tax evasion and money laundering. Further, in response to it, the country has introduced reforms to tighten the regulatory framework. Additionally, to combat financial crimes and promote tax transparency, the country remains actively engaged in global efforts. 

Vanuatu

Situated in the South Pacific, for retirees and expats, Vanuatu has quietly emerged as a tax-efficient country. It does not impose any income or corporate tax on individuals. This further reduces the financial and administrative burdens. The country relies heavily on tourism revenue to sustain its government. 

Further, globally, it provides the most affordable and accessible citizenship-by-investment programs. However, in 2015, after the devastating cyclone, the government of Vanuatu, to support reconstruction, reintroduced this program. 

The citizenship program of the country, compared to Caribbean options, is popular for its affordability and simplicity. Considering this, the Vanuatu passport has gained significant strength in recent years.

However, the primary drawback of the country is the logistical difficulties people face in reaching Vanuatu. While the flights are not so costly from major hubs like Kuala Lumpur, the journey is costly and time-consuming. 

Despite these challenges, Vanuatu remains an attractive option for those seeking a tax-free haven and an easy path to citizenship. 

Panama

With a wide array of beaches, skyscrapers, and casinos, Panama is one of the strategically positioned Central American countries. Due to its financial secrecy regulations and favorable tax laws, it is considered a tax haven. This makes it an attractive option for businesses and individuals looking to maintain privacy and minimize tax obligations. 

Further, the territorial tax regime exempts foreign-sourced income. This makes Panama an especially attractive option for location-independent business owners and earners.

• The country operates on a territorial tax system. This further exempts foreign income tax; however, on domestic income, imposes 25% corporate tax. 
• Panama is popular for its growing economy and strategic location.
• Through several visas, specifically the Friendly Nations Visa, one can obtain residency in Panama. 

So, these were some of the top countries with low or no income taxes in the world. Moving ahead, let's know who gets the most benefits from moving to one of these countries. 

What Benefits Do NRIs Get After Moving to a Country with Low Income Tax?

Moving to a low-tax country provides considerable tax advantages. However, these benefits can vary depending on the citizenship, financial profile, and ongoing tax obligations. For NRIs, it is vital to note that the income that is received or accrued in India is taxable in India, regardless of where they live. 

Further, let's know the benefits NRIs get after moving to a country with low income tax.

• The key benefits are paying little or no income tax on business profits, salary, and other earnings within the jurisdiction of that country. 
• Additionally, many countries with low tax rates do not impose taxes on the capital gains generated from the sale of assets like shares, property, or other investments. It further benefits in high-value transactions.
• For business owners and entrepreneurs, low corporate taxes and favorable tax regimes significantly minimize the tax rate of their business globally.
• Also, some of these countries lack wealth or inheritance taxes. This further facilitates wealth preservation and estate planning for future generations.
• Apart from this, some of these countries do provide complete tax exemptions on withdrawals from retirement funds or foreign pensions. This potentially allows NRIs with minimal tax burden to access their retirement fund. 
• Moreover, being an NRI, your tax obligations in India are limited to your earned or received income in India. The income you received or earned outside India is not taxable in India. Considering this, relocating to a low-tax country maximizes this tax benefit by ensuring that your foreign income is taxed at a lower rate in both countries. 

Moreover, to be compliant with domestic and international tax laws, moving to a low-income tax country needs economic substance and establishing a tax residency in that jurisdiction. 

Final Thoughts

Lastly, there are more than 10 low or no-income-tax countries in the world. Additionally, to relocate, it may take more than the sole tax benefit to convince one. Considering there are several countries that, without taxes, assist in saving more and lowering your income tax burden. To enjoy such tax freedom, you can opt to relocate to Bermuda, the UAE, the Bahamas, Bahrain, or Qatar. 

Moreover, across multiple jurisdictions, it becomes overwhelming to navigate the international tax laws. At Savetaxs, we help NRIs to lower their tax liability, make informed decisions, and avoid missteps before investing or relocating abroad. So, connect with us and ease down your foreign journey while complying with the foreign tax laws.