Saving on corporate income tax is a common reason for companies to relocate to another country. What countries have no company tax?
The list of such jurisdictions is quite extensive. Broadly speaking, they can be divided into three groups:
- countries with no corporate tax
- countries where the corporate tax rate is set at 0%, except for certain types of businesses (such as oil extraction)
- countries where the corporate tax rate is 0% under specific conditions.
There is also a group of countries where taxes are not collected due to a complex political situation (like Somalia), but within the framework of this material, we will exclude them.
In addition, the list includes only those countries where corporate tax is not levied on companies and partnerships. Trusts and foundations (such as those in Liechtenstein) were also not included in this ranking.
Group #1: Countries with no corporate tax
The primary participants in the first group are the classic offshore jurisdictions.
The Bahamas
The Bahamas is a popular offshore destination for international business. The country does not impose corporate tax, capital gains tax, dividends tax, or royalties tax.
Companies are required to pay an annual renewal fee to be eligible to continue operating in the country.
Bermuda
Bermuda may seem like a tourist paradise, but up to 85% of the country’s GDP comes from financial and insurance services. One of the reasons behind this is the absence of corporate tax, as well as VAT, capital gains tax, dividends tax, royalties tax, and interest tax.
British Virgin Islands
The BVI belongs to countries with the lowest corporate tax rates in the world and is one of the most popular jurisdictions for offshore company registration. Up to 40% of all global offshore entities (over 650,000) are incorporated here, thanks to the flexibility, data protection, and absence of corporate income tax and other taxes.
We offer free consultation on setting up a company in the British Virgin Islands.
Vanuatu
Next on our list of countries with minimum corporate tax rates is Vanuatu. This classic offshore jurisdiction attracts investors with its 0% corporate tax and robust asset protection. Company registration can be done entirely remotely.
In addition to corporate solutions, Vanuatu offers first-class citizenship by investment program – one of the most affordable options financially and one of the fastest in terms of obtaining a passport in hand.
Cayman Islands
Non-resident companies in the Cayman Islands enjoy a 0% corporate tax rate. This classic offshore jurisdiction provides a complete exemption from corporate tax for local companies if their activities are conducted outside the country. The favorable period for companies is set at 20 years. The company’s obligations are limited to paying a licensing fee to the government.
Norfolk Island
Norfolk Island is an external territory of Australia in the Pacific Ocean. The country does not impose corporate tax, capital gains tax, dividends tax, royalties tax, or interest tax. VAT is set at 12%.
Turks and Caicos Islands
Like many other offshore countries and jurisdictions, Turks and Caicos has zero corporate income tax and capital gains tax rates. In addition, the islands have a well-developed tourism and financial sector.
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Group #2: Zero corporate tax rate for most companies
Overall, these countries offer a corporate tax rate of 0%, although it may be higher in specific cases.
Bahrain
Companies engaged in oil extraction in Bahrain are subject to a tax rate of 46%. This is where the wealth of this tiny nation stems from. However, other business entities are not subject to corporate tax.
Despite Bahrain coming to our list of countries with the lowest corporate tax, establishing a business there is not easy. It is better to choose another country, even with higher taxes, than to overcome all the bureaucratic hurdles in Bahrain.
Guernsey
For most companies in Guernsey, the corporate tax rate is 0%. The financial sector pays 10%, while the rental business pays 20%. There is no capital gains tax, and taxes at the source are also absent.
This low corporate tax country is actively utilized by affluent individuals from the United Kingdom and generally by Europeans.
Jersey
Just like in Guernsey, the corporate tax rate in Jersey is 0%. However, there are exceptions for the rental business with a tax rate of 20%, as well as for the financial sector, cannabis-related companies, and utility companies, which are taxed at 10%. In addition, Jersey does not impose a corporate tax on capital gains and taxes at the source.
The lowest corporate tax rates and high reputation make Jersey a popular offshore destination for wealthy individuals from Europe.
Isle of Man
The Isle of Man is another significant European offshore jurisdiction offering a zero corporate tax rate. However, banks pay a 10% corporate tax, while corporate income from real estate is taxed at 20%. This is the minimum tax rate in the United Kingdom for those earning from rental income.
Group #3: Zero corporate tax under certain conditions
This group includes countries with a standard corporate tax rate or even countries with the highest corporate taxes, but there are ways to legally reduce it to 0%.
United Arab Emirates
The UAE has become a respected offshore jurisdiction, attracting investors worldwide. The reasons for this are a 0% corporate tax rate and the right for a foreigner to own 100% of a company if registered in a free zone.
However, it is important to note that starting from June 1, 2023, new regulations will come into effect, introducing a 9% corporate tax. This is still a relatively low corporate tax rate, and it will not apply to all companies. However, at present, specific criteria for selecting companies for corporate taxation have not been published.
Do you want to start a business in the UAE? Find out the differences between LLC and sole proprietorship in this country.
Panama
For companies conducting business within Panama’s territory, the corporate tax rate is 25%. However, thanks to the territorial principle of taxation, Panama is on the list of countries with the lowest corporate tax rate. If the profit is earned outside the country, the corporate tax rate is 0%.
In addition, Panama offers a developed banking sector, an advantageous location, and the US dollar as the local currency. The value-added tax (VAT) rate is 7%.
Panama also has interesting programs for obtaining permanent residency by investment.
Saint Kitts and Nevis
Many people tend to think of Saint Kitts and Nevis as a classic tax haven with zero taxation. However, that is not entirely accurate. The corporate tax rate is a significant 33% if the income is earned within the country’s territory. This applies to both residents and non-residents.
However, if the profit is earned outside the country, there is an opportunity to avoid paying corporate tax, as well as capital gains tax.
If your goal is also to avoid personal income tax, it may be worth considering obtaining citizenship in Saint Kitts and Nevis. This country offers a highly respected and time-tested citizenship by investment program.
Our experts are ready to assist you in opening an offshore company in Nevis with a bank account in Belize.
Estonia
Estonia is a relatively popular country among foreign investors, with a corporate income tax rate of 20%. However, the tax is not paid as long as the profits are reinvested into the company (rather than distributed as dividends).
Additionally, Estonia offers the option to register a company in a free trade zone, which provides the additional advantage of being exempt from VAT and customs duties.
You can also choose to establish a limited liability partnership (LLP), which is not subject to corporate tax. Taxes are paid by the LLP owners based on their tax residency.
Luxembourg
Luxembourg is quite an expensive country both for living and doing business. It offers a wide range of services for wealthy individuals, including asset protection and capital growth opportunities.
From a corporate perspective, it makes sense to consider the tax-exempt IP holding structure in Luxembourg. This legal form is designed for managing intellectual property, and in this specific case, no corporate tax on profits is required to be paid.
Canada
At first glance, Canada doesn’t seem like a country with low corporate taxes. It has a progressive corporate income tax rate ranging from 15% to 33%.
However, by registering a limited partnership, you can achieve a zero corporate tax rate while obtaining a high-quality, respected entity for international operations. Learn more about partnership registration in Canada.
In addition, Canada boasts one of the lowest VAT rates, set at 5%. Registering a business in Canada also offers the advantage of carrying forward operational and capital losses for 20 years or more.
Uruguay
In Uruguay, it is possible to register an offshore company, which exempts you from paying corporate income tax. The offshore company is allowed to open an account in an Uruguayan bank, but a fee of 1.5% on all assets held in the account throughout the year will be required.
To maintain such a company, a fixed tax amount of USD 850 per year will need to be paid. Incomes generated within Uruguay’s territory are subject to the corporate tax rate of 25%.
Singapore
The country imposes a corporate tax rate of 17% on resident companies. If a company is non-resident (no business activities or banking operations in the country, managed externally), it is possible to avoid corporate tax on foreign income. Additionally, there is no capital gains tax, value-added tax (VAT), sales tax, or withholding tax.
However, if profits are deposited into a bank account in Singapore, a 17% tax payment is required.
The authorities in Singapore introduce interesting incentives, including in the realm of taxation, to attract foreign investments. For instance, the first 100,000 Singapore dollars of profit are exempt from tax if the company has up to 20 shareholders.
You can read more about the taxation of offshore companies in Singapore here.
Hong Kong
For many years, the Hong Kong authorities have made significant efforts to attract foreign investors and international companies. The jurisdiction has implemented a two-tiered profit tax regime based on turnover. Registering a company in Hong Kong entails payment of taxes ranging from 8.25% to 16.5%. Local businesses receive a tax concession on the first 2 million Hong Kong dollars of profit, while the remaining portion is taxed at a rate of 16.5%.
Hong Kong operates under a territorial tax system. If specific criteria are met during an assessment, it is possible to avoid paying tax on income earned outside the country. Obtaining such a status in recent years has become more challenging, so seeking advice from our specialists in advance is advisable.
Hong Kong offers tax incentives for expenditures on research and development (R&D) and certain other capital investments.
New Zealand
Similar to Canada, if you require a reputable jurisdiction, it is possible to register a local limited partnership (LLP) instead of a regular LLC. In this case, the corporate tax rate will be reduced to 0%, but all profits and expenses will be transferred to the personal tax returns of the partnership owners.
On the other hand, New Zealand offers to register some of the most reliable trusts, and this should also be taken into account.
Lebanon
The advantageous location of Lebanon on the Mediterranean coast, adjacent to Israel and Syria, encourages business development and international cooperation. Still, on the other hand, the constant conflicts and challenges in the country and the region create uncertainty and apprehension.
However, offshore companies in Lebanon offer favorable tax conditions:
- fixed tax rate of USD 700 per year instead of the 15-25% imposed on regular companies
- exemption from tax on dividends and salaries sent abroad
- exemption from payroll tax for employees working in the company.
Registering a company in a tax-free country
Companies not required to pay a corporate tax may seem very attractive. However, the registration of such a company requires careful analysis and planning. To maximize the benefits of a foreign company, it is necessary to consider multiple factors:
- your goals
- business type
- partnerships
- turnover.
Therefore, we recommend obtaining more information on the registration process for a company in another country, how it can help reduce taxes, and how to select a suitable jurisdiction. Please schedule a consultation with our experts by submitting your request through the online chat or contacting us through any convenient method.
