Countries With the Best Taxes, Ranked

Banking, finance, and taxes

Published: May 6, 2024 2:50 pm

Taxation and accounting jokes are almost as numerous as lawyer jokes. No doubt, the reason is partly because of the stress-induced tax season and a process many Americans complain is painful and anxiety-ridden. In addition to resenting the complexity of the tax system, a majority (56%) feel they pay more than their fair share in taxes, according to Pew Research Center.

Can relocating to another country help individuals and entrepreneurs seeking to optimize their taxes? Well, according to expat tax services company Greenback, quite a few countries have lower tax rates and less complex tax systems than the U.S.

To find the countries with the best tax rates, 24/7 Wall St. reviewed Greenback’s report Countries and States With the Best Tax Rates. Using PwC’s tax summaries, Greenback found the rates for personal income tax, value-added tax, capital gains tax, inheritance tax, and corporate tax for 144 countries, arriving at an overall tax score out of 100. The 40 countries with the highest score — best tax rates — are listed here. We also added from the World Bank data on gross domestic product per capita in current U.S. dollars and total population.

Several of the highest ranking countries are considered a tax haven, meaning certain taxes there are levied at a low rate or not levied at all, attracting foreign individuals and businesses. These regions also often offer financial secrecy and minimal regulatory oversight. While tax havens can significantly reduce income taxes, they raise ethical and political considerations, Greenback notes, including fairness “and the responsibility of individuals and corporations to contribute to the public finances of their home countries.”

Looking at all the tax categories, Bermuda, the Cayman Islands, Kuwait, the United Arab Emirates, Macau, Oman, Qatar, Hong Kong, Greenland, and Timor-Leste are offering some of the lowest tax rates. “These jurisdictions represent the pinnacle of tax competitiveness,” Greenback adds. While eight countries levy no personal income tax, only Bermuda and the Cayman Islands offer a 0% corporate income tax rate. (See Exactly How Much Each State Taxes Your Gas.)

In the U.S., individual income taxes are by far the government’s largest single source of revenue, with tax dollars mostly going to social services. The U.S. is known for its complex tax code, combining federal, state, and local taxes. Using a progressive tax system, the U.S. personal income tax rate ranges from 10% to 37% at the federal level. And while the U.S. does not have a federal value-added tax, there are state-level sales taxes. It ranks 49th for its overall tax score.

Here are the comparable U.S. figures:

Overall tax score: 59.78 out of 100
Maximum personal income tax rate: 37% — #103 lowest out of 144 countries
Maximum value-added tax rate: 0.0% — #1 lowest of 144 counties
Maximum corporate tax rate: 21.0% — #58 lowest out of 144 countries
GDP per capita, 2022: $76,330 — #11 highest of 144 countries

Why This Matters

Young stressed Caucasian couple facing financials troubles, sitting at kitchen table with papers, calculator and laptop computer and reading document from bank, looking frustrated and unhappy

With tax season in the rearview mirror, now is the time that some people may be asking themselves whether it is worth relocating in order to pay less taxes and avoid the anxiety that comes with filing taxes. Some countries are indeed tax havens for individuals and/or corporations, or simply have lower tax rates, and corporations and individuals can relocate there. Of course, many other issues come into play when considering relocation, including socioeconomic factors and geographical location, among others. Here we aim to at least provide a list of the countries that may be more convenient in one aspect only — taxes.