I bet you would love to know which are the countries with the lowest individual tax rates in the world. Well, get ready as by reading the following you are about to find out!
No matter how different the countries can be, they all have taxation systems. And no matter how different the people in various countries could be different, the one thing they have in common – hating the tax rates! But did you know that there are even 18 tax free countries in the world? It would be such an enjoyable life without cutting off your salary every month, wouldn’t it?
However, that situation is rare. Some countries such as Sweden, on the contrary, have very high income tax rates. In order to find out which are the countries with highest income tax check out one of our previous articles written on that topic – 10 Countries with the Highest Tax Rates in the World. While researching our main topic, we find that, according to some sources, the highest taxed countries in the world in 2017 is Aruba with 58.95% income tax rate. Moreover, most of the countries with high taxation are Europe based. So we wondered, which are the low tax countries in Europe? And that is something that you will have to wait to read in our list, as the country that is on the top is the European one.
In order to create our list of countries with the lowest individual tax rates in the world first, we took suggestions from Individual income tax rate table made by KPMG International Cooperative and singled out the countries with lowest income tax. Then, we consulted Worldwide Tax Summaries Online by PwC (PricewaterhouseCoopers) and checked data for personal income tax for each country that was singled out previously. Finally, we combined the data from both sources. For each country mentioned on the list, the personal income tax information is derived from PWC report as they analyzed more thoroughly income tax rates by country. In addition, if you are among the richer population in the world, you would definitely be interested to know more about the countries with the lowest tax rates for the rich.
And now, without further ado, let’s check out our list of countries with the lowest individual tax rates in the world!
18. Estonia
Estonia has a proportional tax rate of 20%, which applies to all items of income derived by a resident taxpayer. What is good is that certain pension payments are subject to 10% income tax. A person who is Estonian resident is liable to tax on worldwide income, while non-residents are taxed based on their Estonian-source income. For expatriates, there are no special taxation rules.
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17. Hungary
In Hungary, personal income tax (PIT) is 15% of taxable gross income, from 2016. If income is derived from employment activity which is performed in Hungary but paid from abroad, it is still considered to be a domestic-source income. If the income is paid from abroad, income taxation depends on whether the income was transferred electronically or brought into the country in cash.
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16. Ukraine
Ukrainians have the standard tax rate of 18%, which applies to income received as salary. Also, it includes foreign income, civil agreements, and incomes that are not covered elsewhere. The same tax rate is for the income received from abroad.
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15. Serbia
The taxation rate in Serbia that ranks 15th in our list of countries with the lowest individual tax rates in the world depends on the income level. So, if your income exceeds the threshold (between three and six times the average annual salary which is around 400$), the tax rate is 10%. However, if the income exceeds six times the annual average wage, then the rate is bigger (15%). Non-residents of Serbia are taxed based on their Serbian-sourced income related to their work in or for the Republic of Serbia. They also have the annual tax which represents an additional tax.
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14. Jordan
Individual tax rate in Jordan depends on the amount of the income. For the first 10,000 Jordanian dinars your tax rate will be 7%, for the next 10,000 it will be double (14%), and finally, the remaining balance will be taxed 20%. Any income incurred in or for Jordan is taxed under these measures. The Jordan PIT is the only tax on personal income in Jordan, which means there are no additional ones on the local level.
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13. Belarus
On the 13th place on our list of countries with the lowest individual tax rate in the world is Belarus. The individual tax rate is 13%, for any individual income derived from the country and it is also used for taxation of foreign sources. Taxation differs if individuals or entrepreneurs are registered with High Technology Park (the tax rate for them is 9%). Income from gambling prizes is taxed at the rate of 4%.
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12. Bulgaria
Bulgaria has a flat tax rate of 10% that applies to all personal income. Individuals are taxed in Bulgaria based on their tax residency status. Bulgarian tax residents are taxed on their worldwide income. Non-residents are taxed in Bulgaria only on their Bulgarian-source income, whereas any income that is derived as a result of employment in the territory of the country is under this taxation system, regardless of from where or whom it is paid.
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11. Mauritius
In Mauritius, personal income tax is 15%. Individuals that derive income from Mauritius based sources are subjected to this tax rate, regardless of their nationality. For Mauritanians, the same income tax is applicable even though they are not residents on the territory of the Mauritius. Also, there are no additional local taxes.
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10. Georgia
Personal income in Georgia that’s next in line on our list of countries with the lowest individual tax rates in the world, is subjected to the 20% tax rate. What is very good in this country is the fact that individuals with the annual salary less than 30,000 Georgian lari (GEL), people without employment and the ones who register as a micro business will be exempt from tax on their business income. Moreover, individual entrepreneurs with the annual turnover of less than GEL 100,000 pay 5% tax on their turnover. This rate can be lower (3%) if the expenses from the small business exceed 60% of their sales.
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9. Russia
In Russia, residents are liable to a flat PIT rate of 13% for all types of income received, with few exceptions. First, the excess interest income is taxed at 35%, then, the tax rate is same for any awards or prizes received, and finally, from 2015, dividends which were taxed in previous years with 9% tax rate, now are 13%. Non-residents pay 30% tax income for all types of income received from Russian sources, except for: dividends from Russian companies (15%), income of highly qualified foreign professionals (13%), incomes of foreign nationals from non-visa countries (13%) and income of refugees for work duties (13%).
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8. Fiji
On the 8th place on the list of the countries with the lowest individual tax rates in the world is Fiji. Its income tax depends on whether the resident’s income exceeds FJD 50,000. In that case, income tax is FJD 5,460 plus 20% of the amount that exceeds FJD 50,000. If it is the case of non-residents, income tax is 20%. As there are many variations, we advise you to look at the well-explained table on this link.
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7. Costa Rica
Personal income taxes in Costa Rica which ranks 7th in our list of countries with the lowest individual tax rates in the world are going from 0% to 25%, depending on the income on local level regardless of nationality or resident status. Individuals that have a domicile in this country and receive income within its boundaries are taxable. Non-residents, on the other hand, are liable only for the applicable withholding taxes (WHTs), which is dependent on the nature of their income.
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6. Bosnia and Herzegovina
The taxation in Bosnia and Herzegovina is a flat tax rate of 10%. Even though the country consists of three entities, taxes on the personal income are the same. For example in Republika Srpska, the flat tax rate is also 10% and the same is for the Brčko district. On the other hand, tax rate differs for small entrepreneurs who are taxed at a 2% rate on their total annual revenue.
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5. Montenegro
In Montenegro taxation is based on their residence status. Personal income tax is 9%, and it is levied on salaries, property-related income, and investment income. For a non-resident tax rate is 5%. In 2016, Montenegrin government raised the tax rate to 11% of gross salaries exceeding average monthly salary.
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4. Macedonia
Fourth on our list of countries with the lowest individual tax rates in the world is Macedonia. Same as in Montenegro, the tax rate is based on the residence status. The individual tax rate for this country is 10%. Also, there are no local taxes on income.
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3. Kazakhstan
Residents of Kazakhstan are taxed based on their worldwide income, whereas tax non-residents are taxed only on their Kazakhstan-source income that is non-taxable at the source. The individual tax rate is 10%, and in just some cases it can be 20% (check it out at this link). Moreover, 5% of the tax rate is applicable for dividends received in and outside of Kazakhstan.
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2. Mongolia
In Mongolia, the individual tax rate on salary income is 10%. The same tax rate is for the income from the property. However, it differs for incomes from scientific, literary and artistic works, where the tax rate is 5% and from the sale of immovable property where it is 2%. Income from betting games and gambling is taxed 40%.
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1. Guatemala
At the top of our list of countries with the lowest individual tax rates in the world is Guatemala. Personal tax on income in this country is 5% if it isn’t over 300,000 Guatemalan quetzals and 7% if it is. Citizens and residents or non-resident individuals are taxed on their compensation attributable to services rendered in Guatemala or other Guatemalan-source income.
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