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November 25, 2024 | 08:34 pm
TEMPO.CO, Jakarta - What is an income tax? Investopedia defines income tax as a type of tax imposed by the government on income earned by businesses or individuals. These entities are obligated to file an annual income tax return.
While income tax is a vital source of state revenue in many countries, some operate without this type of tax due to the presence of more robust revenue streams, like tourism or natural resources.
So, what are those countries where people are not required to pay personal income tax? Citing Investopedia and Nomad Capitalist, here’s the list of countries with no income tax.
1. Qatar
Income tax is indeed attractive, but Qatar does not seem to be in need of imposing the tax. As one of the richest countries in the world, the Gulf state thrives on its vast oil and natural gas reserves, from which the residents enjoy zero income tax.
Nevertheless, the country still imposes a 10 percent corporate income tax (CIT), notably in the Qatar Free Zones Authority (QFZA). It is worth mentioning that setting up in these zones offers numerous benefits, such as full ownership and the possibility of up to a 20-year tax holiday for CIT.
2. Monaco
For those seeking tax-free living, Monaco can be your ideal destination. The country is particularly renowned for its tourism and has emerged as a major banking center.
Although living in Monaco may cost you a fortune, some people find it attractive to live without worrying about paying taxes. However, you first need to deposit a quite hefty amount of money, around 500,000 to 1,000,000 euros, and buy or rent a house to acquire citizenship.
3. The Bahamas
The Bahamas is among the countries with no income tax. It boasts stunning coastal views, allowing it to be the leading country in tourism. Investopedia also adds that the Caribbean country thrives on international banking and investment management.
Previously, it was not impossible for foreigners to secure a temporary residence permit, as obtaining the renewable permission cost only US$1,000.
However, according to Nomad Capitalist, the Immigration Act of The Bahamas currently requires expats to purchase a property of, at least, US$750,000 for a long-term stay.
4. Kuwait
Kuwait implements a no-income-tax policy, thanks to its abundant oil and petroleum supporting its GDP. Even so, the Middle Eastern country charges a 15 percent corporate income tax.
In case you're considering being a permanent resident in the country, citizenship can be acquired if you have Kuwaiti relatives or formal employment.
5. Bahrain
Bahrain is among the Middle Eastern countries with no income tax. It heavily relies on the oil and natural gas industries, but Bahrain also has hospitality and retail sectors as its other sources of revenue.
In exchange for not paying personal income tax, people in Bahrain are required to contribute to social insurance and unemployment programs.
6. Brunei Darussalam
Brunei Darussalam shares some similarities with Bahrain in terms of revenue streams. The Southeast Asian country depends on its natural gas and oil sector to support the economy.
Alongside being exempted from income tax, citizens in Brunei also benefit from publicly funded education and medical services.
7. Vanuatu
Vanuatu's strategic location in Oceania provides the country with a geographical advantage in the tourism industry. With its breathtaking coastal areas, Vanuatu has tourism as its primary source of revenue, hence no income tax.
The country is, too, renowned for the streamlined process of getting a passport. Becoming a permanent resident of Vanuatu is possible by the citizenship-by-investment program.
8. Maldives
Rounding off our list of countries with no income tax is the Maldives. The country levies no tax on the citizens, thanks to its robust tourism. Nevertheless, securing citizenship in the country is close to impossible because there has not been a specific program that can cater to expats to reside permanently.
Robust sources of revenue, especially in tourism and natural resources, enable these countries to levy no income tax. We have covered several low-tax countries in Asia. Click the link for more insights.
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