The revenue model of the government is based on the tax system. The structure of a country’s tax code is a major player that determines its economic performance. The collection of taxes and fees is an underlying responsibility of the government to generate public revenues that help in financing infrastructure, human capital, and services for citizens and businesses. Individuals whose income falls under the tax brackets have to pay income taxes to the state. Countries with poor tax systems can disrupt their domestic economy and impact economic decision-making. Many countries have recognized the significance of tax systems and have reformed their tax codes.
Global Taxation: An Analysis
Over the past decades, marginal tax rates on individual and corporate incomes have dropped significantly across the Organisation for Economic Co-operation and Development (OECD) nations. The United States continues to reduce its personal income tax rates and corporate income tax rates. In 2024, 34 US states will go through significant tax changes. 16 states with income tax cuts in 2024 have previously been covered. Other countries such as France have reduced their corporate income tax rates by several percentage points, as per the Tax Foundation. Portugal has made improvements to its corporate tax base, while Belgium has made its corporate tax base less competitive. Chile, the US, and the UK are phasing out temporary improvements to their corporate tax bases.
The global economies have gone through a massive shift following the COVID-19 pandemic. Inflation, high interest rates, and fiscal pressures have impacted the earnings of individuals globally. This has affected the tax collection for countries. For instance, the total revenue of the US government increased from $4.19 trillion in 2015 to $4.44 trillion in 2023. This is a slight increase and if we consider the revenue increase against inflation, the total revenue has decreased over the last seven years.
A competitive tax code is important for a thriving economy and a competitive tax code helps in keeping the marginal tax rates low. In today’s globalized world, individuals and corporations opt for places where the rate of return is highest and they have to pay the least taxes. Countries such as Saudi Arabia, Qatar, and the United Arab Emirates are considered some of the top places for investment with the lowest income taxes. If a country’s tax rate is too high, it will repel investment elsewhere which could lead to slower economic growth.
According to the Tax Foundation’s International Tax Competitiveness Index, Estonia attained the top spot in 2023 among the OECD countries for having the best tax code for a straight tenth year. The ranking of the International Tax Competitiveness Index is based on several other taxes including property taxes and cross-border taxes, in addition to personal and corporate income taxes. Estonia is also one of the safest low tax countries to live in for the US citizens. Latvia has the second most competitive tax system and follows an Estonian system for corporate taxation. New Zealand, Switzerland, Czech Republic, Luxembourg, and Turkey, are the next best countries with the most competitive tax systems, having a competitive tax score of 88.5, 86.1, 84.7, 81.2, 78.9, and 78.6, respectively. Estonia, Switzerland, Czech Republic, Luxembourg, and Turkey are some of the top countries with the lowest income tax rates in Europe. Whereas, Finland, Denmark, Austria, Sweden, Aruba, and Belgium are the European countries with the highest income tax rates in the world.
Tax Services Providers
H&R Block, Inc. (NYSE:HRB), Intuit Inc. (NASDAQ:INTU), and Ryan Specialty Holdings, Inc. (NYSE:RYAN) are some of the top tax services providers in the world, offering a wide range of services and online software to help individuals with their taxes and auditing.
H&R Block, Inc. (NYSE:HRB) has over 70 years of market experience and is one of the leading tax preparation companies in the world. The company operates in Australia, Canada, the U.S., and Europe. On January 16, H&R Block, Inc. (NYSE:HRB) announced the launch of the Beneficial Ownership Information Reporting service by Block Advisors. The US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) has imposed Beneficial Ownership Information reporting rules that will impact over 32 million business owners. H&R Block, Inc.’s (NYSE:HRB) new reporting service will guide business owners regarding the new rules of Beneficial Ownership Information. Chief Strategy and Small Business Officer at H&R Block, Inc. (NYSE:HRB), Jamil Khan, said:
“Block Advisors introduced its Beneficial Ownership Information Reporting service to help small business owners navigate this new reporting requirement, so they are compliant and avoid costly penalties.”
Intuit Inc. (NASDAQ:INTU) is one of the world’s top tax service providers that owns leading tax preparation software including TurboTax, QuickBooks, Credit Karma, and Mailchimp. On December 5, 2023, Intuit Inc.’s (NASDAQ:INTU) fintech firm Credit Karma launched new features to its platform, providing online checking and savings solutions for consumers. The company through Credit Karma Money added features such as overdraft coverage, up to five-day early access to government benefits for those who qualify, and providing members with no-fee overdraft protection. Credit Karma is offering this service exclusively to its US consumers.
Ryan Specialty Holdings, Inc. (NYSE:RYAN) is a leading international specialty insurance firm that also offers tax-related services. On December 1, 2023, Ryan Specialty Holdings, Inc. (NYSE:RYAN) announced the acquisition of AccuRisk Holdings, LLC (AccuRisk), which is headquartered in Chicago. AccuRisk is a medical stop loss managing general underwriter (MGU) founded in 2017. On January 2, Ryan Specialty Holdings, Inc. (NYSE:RYAN) reported that it has appointed Pat Ryan, Jr. to its Board of Directors, effective January 1. For the past 25 years, Pat Ryan, Jr. served on the board of Penske Automotive Group, Inc. (NYSE:PAG). William J. Devers has retired from Ryan Specialty Holdings, Inc.’s (NYSE:RYAN) Board of Directors following the new appointment.
These were a few leading tax service providers in the world. Now, let’s take a look at the countries with the lowest income taxes in the world.
20 Countries with the Lowest Income Tax Rates in the World
20 Countries with the Lowest Income Tax Rates in the World
Our Methodology
To list countries with the lowest income tax rates in the world, we have used three metrics including personal income tax rate, corporate income tax rate, and GDP per capita (PPP). The key metric is the personal income tax rate based on which we have ranked the countries with the lowest income tax rates in the world. For the countries with similar personal income tax rates, we have ranked them based on their corporate income tax rate. If both the metrics of personal and corporate income tax rates are the same, then we have used the country’s GDP per capita, as of 2024, to rank them - the country with higher GDP per capita is ranked higher on the list. We have taken the personal income tax rate and corporate income tax rate data from the PwC and Trading Economics database, which are updated as of December 2023 or January 2024. The GDP per capita (PPP) data is taken from the International Monetary Fund’s (IMF) database. Bermuda and Cayman Islands did not have GDP per capita data available on the IMF database, therefore, we have taken their GDP per capita from the World Bank.
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20 Countries with the Lowest Income Tax Rates in the World
20. Kazakhstan
Personal Income Tax Rate: 10%
Corporate Income Tax Rate: 20%
GDP Per Capita: $34,480
Kazakhstan is one of the fastest growing economies in Central Asia. The country has a 10% top personal income tax rate and a 20% top corporate income tax rate. With a GDP per capita of $34,480, Kazakhstan ranks among the countries with the lowest income tax rates in the world.
19. Romania
Personal Income Tax Rate: 10%
Corporate Income Tax Rate: 16%
GDP Per Capita: $43,750
Romania is one of the richest European countries with a GDP per capita of $43,750. The country has a 10% top personal income tax rate and a 16% top corporate income tax rate. Romania is ranked 19th among the countries with the lowest income tax rates in the world.
18. Timor-Leste
Personal Income Tax Rate: 10%
Corporate Income Tax Rate: 10%
GDP Per Capita: $3,710
Timor-Leste is an island country in Southeast Asia. The country has a top-end personal income tax of 10% and a top-end corporate income tax rate of 10%. Timor-Leste ranks among the countries with the lowest income tax rates in the world.
17. Paraguay
Personal Income Tax Rate: 10%
Corporate Income Tax Rate: 10%
GDP Per Capita: $16,270
Paraguay is one of the leading economies in South America having a GDP per capita of $16,270. Paraguay’s both top personal income tax rate and top corporate income tax rate is 10%. Paraguay is one of the countries with the lowest income tax rates in the world.
16. Kosovo
Personal Income Tax Rate: 10%
Corporate Income Tax Rate: 10%
GDP Per Capita: $16,760
Officially the Republic of Kosovo has a GDP per capita of $16,760. The country has 10% top personal income and corporate income tax rates, respectively. Kosovo is ranked 16th among the countries with the lowest income tax rates in the world.
15. Bosnia and Herzegovina
Personal Income Tax Rate: 10%
Corporate Income Tax Rate: 10%
GDP Per Capita: $20,730
Bosnia and Herzegovina is a country on the Balkan Peninsula in southeastern Europe. The country’s top personal income tax rate and the top corporate income tax rates are 10%. With a GDP per capita of $20,730, Bosnia and Herzegovina ranks among the countries with the lowest income tax rates in the world.
14. North Macedonia
Personal Income Tax Rate: 10%
Corporate Income Tax Rate: 10%
GDP Per Capita: $22,580
North Macedonia has a GDP per capita of $22,580. The country has a 10% top-end personal income tax rate and a 10% top-end corporate income tax rate. North Macedonia is one of the countries with the lowest income tax rates in the world.
13.Bulgaria
Personal Income Tax Rate: 10%
Corporate Income Tax Rate: 10%
GDP Per Capita: $35,850
Bulgaria is one of the countries with the lowest income tax rates in the world. The country has a top personal income tax rate of 10% and a top corporate income tax rate of 10%. Bulgaria’s GDP per capita is $35,850.
12. Turkmenistan
Personal Income Tax Rate: 10%
Corporate Income Tax Rate: 8%
GDP Per Capita: $20,550
Turkmenistan is one of the richest economies in Central Asia having a GDP per capita of $20,550. The country has a 10% top personal income tax rate and an 8% top corporate income tax rate. Turkmenistan ranks 12th among the countries with the lowest income tax rates in the world.
11. Guatemala
Personal Income Tax Rate: 7%
Corporate Income Tax Rate: 25%
GDP Per Capita: $11,000
Guatemala has a top-end personal income tax rate of 7% and a top-end corporate income tax rate of 25%. Guatemala’s GDP per capita stands at $11,000. Guatemala is one of the countries with the lowest income taxes in the world.
10. Brunei
Personal Income Tax Rate: 0%
Corporate Income Tax Rate: 55%
GDP Per Capita: $76,860
Brunei has a zero tax on personal income and has a 55% tax rate on corporate income. Brunei has a GDP per capita of $76,860 and ranks among the countries with the lowest income taxes in the world.
9. Saudi Arabia
Personal Income Tax Rate: 0%
Corporate Income Tax Rate: 20%
GDP Per Capita: $71,370
Saudi Arabia is one of the countries with the lowest income tax rates in the world. Saudi Arabia is emerging as one of the strongest economies in the Middle East, having a GDP per capita of $71,370. The country has a zero personal income tax rate and a 20% corporate income tax rate.
8. Oman
Personal Income Tax Rate: 0%
Corporate Income Tax Rate: 15%
GDP Per Capita: $40,020
Oman is another Middle Eastern nation that ranks among countries with the lowest income tax rates in the world. Oman has zero taxes on personal income while charging a 15% tax on corporate income.
7. Kuwait
Personal Income Tax Rate: 0%
Corporate Income Tax Rate: 15%
GDP Per Capita: $53,760
Kuwait is a small island country with a strong economy. The country has a zero personal income tax rate and a flat 15% corporate income tax rate. With a GDP per capita of $53,760, Kuwait ranks among the countries with the lowest income taxes in the world.
6. Qatar
Personal Income Tax Rate: 0%
Corporate Income Tax Rate: 10%
GDP Per Capita: $118,150
Qatar is one of the richest countries in the world with a GDP per capita of $118,150. The country has no income tax on personal income and charges a 10% corporate income tax rate. For petroleum companies, the state charges a minimum corporate income tax rate of 35%. Qatar ranks sixth among the countries with the lowest income tax rates in the world.