Income TAX

Countries and Income Tax

There are several countries where individuals can legally avoid paying personal income tax, either because they have no income tax at all or because they offer special tax exemptions for foreign income. Here are some of them:

Countries with No Personal Income Tax

1. United Arab Emirates (UAE) – No personal income tax; wealth-friendly business environment.
2. Bahrain – No income tax on individuals; only some corporate taxes apply.
3. Saudi Arabia – No personal income tax for residents; only expats may pay social security contributions.
4. Qatar – No income tax on salaries or wages.
5. Oman – No personal income tax; corporate tax applies in some cases.
6. Kuwait – No income tax; expats only pay social security contributions.
7. Bahamas – No income tax; relies on tourism and offshore banking.
8. Bermuda – No personal income tax; high cost of living and work permit requirements.
9. Cayman Islands – No income tax, capital gains tax, or wealth tax.
10. Monaco – No income tax for residents, except French citizens.

Countries with Tax Exemptions on Foreign Income

These countries do not tax income earned outside their borders:

• Panama – No tax on foreign-earned income.
• Georgia – No tax on foreign income for residents.
• Malaysia (Labuan) – Special offshore tax rules apply.
• Paraguay – No tax on foreign-earned income.
• Vanuatu – No personal income tax; popular for offshore banking.

Countries with territorial tax systems only tax income earned within their borders, meaning foreign-earned income is tax-free for residents. Here are some of the best options:

Countries That Do Not Tax Foreign Income

1. Panama – Only local income is taxed; foreign earnings are exempt.
2. Georgia – No tax on foreign-earned income; straightforward residency process.
3. Malaysia (Labuan) – Special offshore tax rules; foreign income is usually tax-free.
4. Paraguay – No tax on foreign income; easy residency with minimal stay requirements.
5. Hong Kong – Uses a territorial tax system; foreign-earned income is exempt.
6. Singapore – Foreign income is tax-free unless remitted for business purposes.
7. Costa Rica – No tax on foreign-earned income; popular for expat residency.
8. Gibraltar – No tax on worldwide income for non-resident companies and individuals.
9. Belize – No tax on foreign income; ideal for offshore business.
10. Vanuatu – No personal income tax; offshore businesses benefit from tax exemptions.

And more: Philippines operates a territorial tax system, meaning residents are only taxed on income earned within the country. Foreign-earned income is generally tax-free unless it is remitted to the Philippines by certain types of residents.

Who Benefits from Tax Exemptions on Foreign Income?

• Non-resident citizens: Filipinos who have officially moved abroad and established residency elsewhere do not pay taxes on foreign income.
• Resident foreigners: Expats living in the Philippines are only taxed on their Philippine-sourced income. Any salary, dividends, or business income earned abroad is not subject to Philippine taxes.

Exceptions & Considerations

• Citizens living in the Philippines must report worldwide income.
• Special Resident Retiree’s Visa (SRRV) holders enjoy tax benefits, including exemptions on pension income.
• Foreign businesses operating in the Philippines may have tax obligations.