Countries with no income tax in the world
In a world where taxes are highly considered necessary, there are still countries where individuals enjoy the benefits of earning salaries and wages without paying income taxes.
According to the World Bank, it is important to pay taxes as "Taxation not only pays for public goods and services; it is also a key ingredient in the social contract between citizens and the economy."
Despite the "glaring" benefits, as of Tuesday, June 18, 2024, Trading Economics reports that three countries and territories offer the advantage of no income tax to their citizens and residents.
Here are three countries with no income tax:
Qatar
In Qatar, the tax system is based on the territorial principle. This means that individuals are subject to taxation in Qatar if they have earned income originating within the country, irrespective of their tax residency status. However, personal income from employment, such as salaries, wages, and various allowances, is not subject to income tax, explains PwC tax summaries.
Saudi Arabia
Saudi Arabia has no income tax but VAT-registered businesses pay VAT at a standard rate of 15% which was introduced in 2021. "Raising VAT was a painful measure and I hate to hurt any Saudi citizen, but it is my duty to build Saudis a long-term sustainable future," the prince said in an interview aired on Saudi TV to mark the fifth anniversary of Vision 2030. Raising VAT to 15% is a temporary decision that will last one to five years and then it will go down to between 5% to 10%," Saudi Arabia's Crown Prince Mohammed bin Salman said in a televised remark in 2021 as reported by Reuters.
United Arab Emirates
In the UAE, individuals, investors, and corporations are exempt from income tax, except for oil companies and foreign bank branches. The country's longstanding free economy model permits the full repatriation of profits without restrictions. The UAE's substantial oil and natural gas reserves provide a significant portion of government revenue, reducing the need to tax personal incomes.
These tax havens attract people with the promise of keeping more of their hard-earned money, but how do these countries manage without the revenue from income taxes?
The secret lies in alternative sources of revenue. For instance, some countries are rich in natural resources like oil and gas, which can be heavily taxed at the corporate level. Others rely on tourism, imposing taxes on goods and services consumed by visitors, or on luxury items and real estate transactions.
