Which Country Is Tax-Free for Business?

Are there any tax-free countries for companies in the world? Definitely, yes. Discover 19 countries with the lowest or even zero income taxes, either universally or under specific conditions. Also, do not forget that with our expert assistance, you can open a company in the best tax-free jurisdictions quickly and safely.

The highest and lowest taxes for companies

Tax systems vary across different countries, including the level of income tax rates. For instance, the highest corporate tax rates for businesses can be found in countries like Venezuela, Iraq, and Malta. However, if you keep up with the corporate world, you would know that in Malta, for example, it is possible to reduce income tax from 35% to an effective rate of 5-10%. This is precisely why it can be challenging to determine in which country it would be best to launch a business to take advantage of tax incentives.

However, there are countries where the tax is not just low (typically tax rate is considered low if it is below 12.5%) but actually zero. An example is Vanuatu, where the tax is not collected in principle. On the other hand, there are countries like the UAE where the income tax rate can be high, but under certain conditions, the tax is reduced to zero.

Therefore, we will briefly explain how to achieve a 0% corporate income tax rate in each country in our list.

Check out our ultimate guide on offshore company taxation.

1. Bahamas

The Bahamas has been a popular offshore destination for many years, partly thanks to its tax policies. The country does not impose corporate tax, capital gains tax, dividend tax, gift tax, inheritance tax, or personal income tax.

Companies are required to pay fees for obtaining licenses for real estate, as well as value-added tax (VAT). In addition, the country ensures a high level of personal information protection.

2. Bahrain

Bahrain is a tiny country known for its oil production. Thanks to this, it does not impose a corporate or personal income tax, as well as taxes on dividends, gifts, or inheritance. However, there is an exception for oil companies, which are subject to a 46% income tax.

If desired, you can obtain residency in Bahrain. One drawback, however, is that protests are not uncommon in the country, leading to an unsettled situation on the streets. Personal security can be compromised during such periods.

3. Bermuda

Bermuda is one of the oldest offshore jurisdictions with a zero-tax policy. Foreign businesses have been registering companies in this country for decades, and almost all the world’s largest enterprises have at least one representative office here.

While Bermuda is popular as a tourist destination, 85% of its GDP is dominated by the insurance and financial services sectors.

There is no corporate income tax in Bermuda, nor is there a value-added tax (VAT), capital gains tax, withholding tax, or inheritance tax.

4. British Virgin Islands (BVI)

This is another classic offshore destination where businesses enjoy tax benefits. Despite being a British Overseas Territory, the country uses the US dollar due to its close connection with another offshore jurisdiction, the US Virgin Islands.

Business registration can be done remotely. While relocation is possible, it is not the place where you would find a pleasurable lifestyle.

Do you want to register an International Business Company in the British Virgin Islands? Our experts will help in this matter!

5. Brunei

The Sultanate of Brunei is a wealthy country in Southeast Asia. While Brunei isn’t particularly welcoming to expats and foreigners, thanks to the financial situation, there are no income taxes here.

We strongly do not recommend opening a company or relocating to this country, but due to the lack of income taxes, it still made it to our list.

6. Vanuatu

Vanuatu, a small island nation in the Caribbean Sea, is known not only as a business hub but also as a country that offers citizenship by investment. It is perhaps the most accessible program for obtaining a second citizenship, and a Vanuatu passport allows visa-free travel to over 100 countries.

In addition to providing offshore services for businesses, Vanuatu attracts tourists and engages in agricultural activities.

Taxes on worldwide income are not collected from companies in this country, as well as many other taxes.

7. Eastern Sahara

Eastern Sahara is an unexpected country on this list, as it is a disputed territory. However, it has established diplomatic relations with 35 countries and is a full member of the African Union.

Despite the lack of resources and other stable sources of income, income taxes are not collected here. Perhaps it is precisely because the country is unrecognized and constantly plagued by armed conflicts.

It is far from being the most attractive territory for investments, and even the stringent Brunei appears significantly more appealing in comparison.

8. Guernsey

As a dependent territory of the United Kingdom, Guernsey is also one of the most respected and expensive offshore jurisdictions in Europe and the world. The corporate income tax rate in this country is 0%. The exception applies to the financial sector, which is taxed at 10%, and companies engaged in real estate, oil, etc., taxed at 20%.

In addition, there is no capital gains tax, withholding tax (for companies), or inheritance tax.

Explore the top 15 European countries with low taxes and favorable tax residence conditions.

9. Jersey

As a neighbor and colleague of Guernsey, Jersey is also a popular European offshore jurisdiction. The corporate income tax rate in Jersey is 0%. However, businesses engaged in certain financial services, cannabis, or utility supply are subject to a 10% tax rate. The rental business is taxed at a rate of 20% (presumably to align with the rules of the United Kingdom).

There is no capital gains tax in the country.

10. Cayman Islands

The primary source of government revenue in the Cayman Islands is tourism. The standard of living in this island country is exceptionally high, making it a popular destination for both vacation and relocation.

Companies in the Cayman Islands do not pay corporate income tax, and there is no requirement to file tax returns (although keeping records and documentation is necessary, as it is everywhere). Additionally, there is no capital gains tax in place.

11. Monaco

Monaco is often referred to as a playground for the wealthy due to the absence of personal income tax in the country. However, the conditions are somewhat different for legal entities.

The country operates under a territorial tax principle, where business income earned outside Monaco is not subject to taxation. The internal tax rate is set at 25%. Taxes are paid by companies, regardless of their legal form, engaged in industrial or commercial activities in Monaco if at least 25% of their income is derived from operations conducted directly or indirectly inside the country’s territory. This also applies to companies (sociétés) whose activities in Monaco involve income from selling or licensing patents, trademarks, production processes and formulas, and literary or artistic copyrights.

To benefit from tax advantages, it is recommended to seek advice from our experts before registering a business in Monaco.

Discover opportunities for obtaining residence of Monaco for self-sufficient individuals.

12. Isle of Man

The Isle of Man is a European offshore jurisdiction and a dependent territory of the United Kingdom. It offers a 0% corporate income tax rate. However, there are exceptions for banks (10% tax rate) and income from real estate within its territory (20% tax rate).

The country uses the British pound as well as its own currency, the Manx pound.

13. Norfolk Island

Norfolk Island does not impose corporate income, capital gains, or withholding taxes. However, there is a 12% value-added tax.

Located in the Pacific Ocean, Norfolk Island is an external territory of Australia. Despite its small size and remoteness from the outside world, this country has relatively low imports as most essential goods are produced locally.

It is an excellent tourist destination, offering stunning views and breathtaking nature. Due to its connection with Australia and New Zealand, conducting business in this region is possible.

14. United Arab Emirates (UAE)

For years, in the UAE, taxes were paid only by oil and gas companies (55%) and foreign bank branches (20%). The rest of the businesses in the country were exempt from taxes. Free zones were popular among foreigners, as they allowed 100% ownership of the company in addition to zero taxes (outside of free zones, 51% ownership must be held by a UAE citizen).

However, it is essential to note that starting from June 1, 2023, the country is introducing a corporate tax rate of 9% on income exceeding AED 375,000 (approximately USD 102,000). If the income falls below the specified threshold or the business qualifies for exceptions within the activities of a free zone (Qualifying Income of a Qualifying Free Zone Person), the tax rate remains zero. Currently, there is an expected decision regarding the criteria that will determine eligible companies.

Check our top expert service in the UAE – offshore company registration in Ras Al Khaimah.

15. Panama

In reality, business taxes in Panama amount to 25%. So why is this country included in this list? It’s because Panama follows a territorial tax principle, which means that income generated by businesses outside the country is not subject to taxation.

This, coupled with a well-developed banking sector and a convenient location, makes Panama an attractive destination for company registration and international business ventures.

The value-added tax rate is 7%, which is generally lower than the VAT rates in other countries worldwide.

Additionally, it is possible to obtain permanent residency in Panama through investment programs.

16. Pitcairn

You’ve probably never heard of this jurisdiction consisting of four islands, but it is the least populated country with only 57 inhabitants. Despite its small population, businesses can register companies here and enjoy income tax exemption. Individuals are also not subject to income taxes.

The currency in circulation in this country is the New Zealand dollar. Reaching Pitcairn is only possible by boat. It is not the most convenient place in the world for conducting business, but it still offers zero corporate income tax rate.

17. Saint Kitts and Nevis

Saint Kitts and Nevis is considered a classic offshore jurisdiction, but in practice, it imposes taxes, and they are quite high. For instance, the corporate income tax rate is 33% for both residents and non-residents.

However, it all comes down to the nuances: business tax is only levied on income generated within the country. There is no corporate tax if you earn income outside of Saint Kitts and Nevis. The withholding tax (royalties, dividends, interest) is set at 15% for non-resident companies, but again, it applies only to income generated within the country.

In addition to offshore companies, this country offers the oldest and most respected citizenship by investment program. In addition, Nevis is famous for perhaps the most reliable asset protection in the world. By combining a Nevis offshore trust and LLC, you can create the ultimate asset protection combo.

18. Somalia

Somalia does not levy corporate or personal income taxes. Unfortunately, the reason behind this is dire: since 1988, it has been embroiled in a civil war, and the government effectively lacks control over the country. During the worst moments, the government only managed to control a few neighborhoods in Mogadishu, the capital.

In recent times, the situation in the country has shown signs of normalization, and there is a slight hope for stabilization. However, it is possible that it is precisely this stability that will put an end to the zero-tax policy, as rebuilding the state will require financing and debt repayment.

Of course, we do not recommend this jurisdiction for conducting business, at least not for now. In Africa, there are much more attractive places to open a company.

19. Turks and Caicos

Turks and Caicos are British overseas territories known for their thriving tourism, financial sector, and fishing industry.

Companies on these islands are not subject to direct taxes: there is no corporate income or capital gains tax. Businesses are only required to pay licensing fees, fees for any necessary additional permits, and customs duties.

Conclusion

Registering a foreign company and avoiding paying corporate income tax is possible. However, it is essential to carefully select the specific country, consider additional expenses for establishing and maintaining such a company, and consider reputational risks.

Much depends on the nature of your business activities and your client-partner relationships. Therefore, we recommend using advice from our experts to find a suitable foreign company and banking account to ensure your enterprise’s stable and secure functioning.

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