19 Countries with No Income Tax Across the Globe (2023)

19 Countries with No Income Tax Across the Globe (2023)

Countries with No Income Tax

There are still some countries across the globe with no tax on personal income (aka ‘tax-free countries). And, while most countries do have a form of personal income tax, there are still some countries that do not have any income tax on individuals for their personal income earnings (employment, investments, rentals, etc.). In these countries in which there is no income tax, it is important to note that there are still normally other types of ancillary income that are taxed (such as wealth taxes). But, if taxpayers plan properly, they may be able to avoid taxes in that country. It is also important to keep in mind that US persons who are lawful permanent residents or US citizens are taxed on their worldwide income even if they are living and earning income in a no-tax jurisdiction. Taxpayers who meet the substantial presence test are also taxed on their worldwide income but if they are living full-time in a foreign country chances are they will not meet the substantial presence test in future years.  Let’s take a look at some of the countries that offer no personal income tax.

10 Most Common Tax-Free Countries & Territories

Here are 10 of the most common tax-free countries and territories to be aware of:

      1. Bahamas

      2. British Virgin Islands

      3. Turks and Caicos

      4. United Arab Emirates

      5. Cayman islands

      6. Bermuda

      7. Saint Kitts and Nevis

      8. Maldives

      9. Monaco

      10. Brunei

Eight Other Tax-Free Countries & Territories

Here are 8 other common tax-free countries and territories to be aware of:

      1. Anguilla

      2. Bahrain

      3. Kuwait

      4. Oman

      5. Qatar

      6. Saudi Arabia

      7. Somalia

      8. Vanuatu

Citizenship-Based Taxation

One very important fact for US persons to keep in mind is that the United States taxes individuals on their worldwide income (aka Citizenship-Based Taxation). Unlike other countries, if you are a US person and even if you live a majority of the time in a foreign country — and even earn all of your income from foreign sources —  you are still taxed on that income just as if it was earned in the United States. Therefore, before a US person decides to hightail it to a tax-free country, they may want to consider formally expatriating from the United States if they want to relinquish their US person status — especially if they have no intent to live any further in the United States.

Foreign Earned Income Exclusion

When are US person resides overseas, they may qualify for the foreign earned income exclusion, which allows them to exclude upwards of $110,000 of their foreign income from being taxed on their US tax return. It also allows them to exclude certain housing expenses that they may have paid while living abroad. There are some twists and turns involving the exclusion — especially for high-income earners and those who also have foreign tax credits to apply — but for a US person living in a tax-free country unless than $110,000 a year, they may qualify for zero tax liability.

Golding & Golding: About our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure and compliance, including taxes for expats.

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