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TEMPO.CO, Jakarta - Certain countries tax their citizens to generate revenue for infrastructure improvement and other purposes. In reality, however, not all countries practice effective taxation mechanisms, such as Indonesia, which was named, by the World Bank, as one of the worst countries in collecting taxes.
This situation does not apply to countries with abundant natural resources, notably oil and gas, or with stable revenue streams to sufficiently support their economy. These countries impose little to no taxes, allowing people to avoid high tax rates.
In this article, we’ll take a look at some countries reputable for being tax havens, which can be an attractive option for individuals, or even corporations, to reduce financial burdens.
List of Top 10 Tax Haven Countries in 2024
Visual Capitalist revealed several countries and territories renowned as tax havens in the year 2024. As mentioned earlier, a tax haven refers to a country that offers the opportunity to minimize tax burdens by virtue of its minimal or nonexistent tax policies, as per Investopedia.
Citing Visual Capitalist and Investopedia, read on to see the complete list.
1. Hong Kong
As a special administrative region of the People’s Republic of China (PRC), Hong Kong is reputable for being one of the world’s tax havens, imposing low tax rates. This is possible since its law limits taxation on wealthy foreign residents and corporations.
2. Switzerland
Thanks to its low tax levels and privacy laws, Switzerland remains a prime destination for foreign corporations and individuals to keep their money. Alas, this convenience has contributed to the prevalence of shell companies in Switzerland.
3. Singapore
With an offshore wealth of US$1.6 trillion, Singapore has long emerged as a magnet for multinational corporations and wealthy individuals alike. In addition to low corporate tax rates, the city-state also offers several tax breaks.
4. Luxembourg
Luxembourg, despite being a tiny European nation, is a strong contender in the tax haven world. Since the 1960s, Investopedia mentioned, Luxembourg has been a go-to destination for global businesses since it offers favorable tax deals of less than 25 percent.
To add, Luxembourg’s prominence as a tax haven country is evidenced by the establishment of numerous branch offices by over 340 companies in the country.
5. Jersey
Many people may not be aware of the existence of Jersey. But, the British Crown Dependency, in fact, is notable for its attractive tax policies. The 45-square-mile island is basically a hotspot for well-off individuals looking to preserve wealth while enjoying a business-friendly environment.
To be precise, Jersey's appeal lies in its low individual and corporate tax rates, which stand at 20% and 10%, respectively. Moreover, the island does not levy inheritance, wealth, and capital gains taxes.
6. Bahrain
Instead of charging personal income tax, Bahrain requires the citizens’ contribution to Social Insurance and unemployment programs. Corporate income tax is almost nonexistent, but companies operating in the oil industry are taxed at a rate of 46 percent.
7. Cayman Islands
When it comes to tax havens, the Cayman Islands are definitely one-of-a-kind. The British Overseas Territory is renowned for its zero-tax policy on income, capital gains, and corporations, making it a prime location for foreign companies to set up subsidiaries.
8. Panama
Much like the Cayman Islands, offshore companies in Panama enjoy an exemption from income, corporate, capital gains, or estate taxes, as long as they engage in business outside of the jurisdiction. Not to mention, Panama’s banking sector implements strict secrecy laws that promise the utmost privacy of account holders.
9. Macao
Macao is another PRC’s special administrative region that is among a significant player in the tax haven world. The so-called “Los Angeles of Asia,” boasting an offshore wealth of US$147 billion, pampers individuals and corporations with its relatively low rate personal and corporate tax structure.
10. Isle of Man
Nestled in the middle of the Irish Sea, the Isle of Man is another British Crown Dependency implementing a separate tax system. Such a practice allows the territory to enjoy low-income tax rates of 10 percent and 20 percent for individuals and a zero rate of tax for companies on most income.
VISUAL CAPITALIST | INVESTOPEDIA
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