Determining Which Countries Have The Lowest Tax Rates – Josh Katz

Determining Which Countries Have The Lowest Tax Rates.I am a US CPA interested in guest blogging about personal finance and taxes,Global tax system,Europe

Determining Which Countries Have The Lowest Tax Rates

There are many factors which need to be considered when determining which countries have the lowest tax rates.  Unfortunately, there is not one list and ranking countries can become subjective.  A country may have a low individual tax rate, but a high corporate tax rate, which may lead someone to think twice before opening a business in that country.  Many countries have a minimum individual tax rate of zero percent, however, the upper threshold can very tremendously. So if you are a low income earner in Andorra or Austria, you may have a zero tax rate.  However, Andorra’s highest individual tax rate is 10 percent, while Austria’s highest individual tax rate is 50 percent.

In addition, there are other taxes that need to be considered.  Payroll taxes, taxes usually imposed on employers, can also very greatly from one country to another.  While many countries have no payroll taxes, Argentina has a 44 percent payroll tax and Belgium’s payroll tax is almost 38 percent.

Another common tax is the sales tax.  While Bulgaria has an individual and corporate tax rate of 10 percent, you can expect to pay an additional 20% in sales tax on everything you buy.  These numbers need to be factored into the overall tax equation.

Determining Which Countries Have The Lowest Tax Rates

 

In addition, taxes can change dramatically within a country.  The US is a good example of this.  The US’s federal tax rates are in the middle compared with other countries.  They are generally lower than the European countries and higher than many developing countries. However, the US’s state tax change that ranking.  Some states in the US have no state income tax such as Alaska or Florida.  However, California has a maximum rate of 13.3 percent and Hawaii has a maximum rate of 11 percent.  In addition, most cities in the US have additional city taxes, and most states have additional sales taxes.  These numbers also increase the total tax rate.Hope this article help you to ‘Determining Which Countries Have The Lowest Tax Rates’?

Some countries may have low tax rates, however their cost of living is very expensive.  For example, Monaco has no individual income tax, however, even a small one bedroom apartment will cost over 600,000 Euro.  At that rate, a taxpayer may have more disposable income if they live in a country with a lower cost of living but a higher tax rate.  Finally other countries may have low tax rates and a low cost of living, but due to political situations and other economic factors they are not considered desirable places to live despite low tax rates.

Determining Which Countries Have The Lowest Tax Rates –

There are some countries which are known for their all around low tax rates. The Bahamas, Bahrain, British Virgin Islands and Kwait, all have a zero percent tax rate for individual and corporate taxes. Brunei, Oman, Qatar, and the UAE all have a zero percent tax rate for individual, but do levy corporate taxes.  Other countries that have generally low taxes, include but are not limited to: Saudi Arabia, Bosnia and Herzegovina, Guatemala, Bulgaria, Mongolia Macau, Russia, Switzerland, Jordan, Hong Kong, and Sri Lanka.  The countries with the highest tax rates include Belgium, Finland, Sweden, Luxemburg, Netherlands, and Austria.

 

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Joshua Katz, CPA is the founder of Universal Tax Professionals, an expat tax firm dedicated to helping Americans living abroad.  Joshua was born in Ohio and is now living in Jerusalem, Israel. He can be reached by email at josh [at] universaltaxprofessionals.com.

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Joshua Katz, CPA is the founder of Universal Tax Professionals, an expat tax firm dedicated to helping Americans living abroad. Joshua was born in Ohio and is now living in Jerusalem, Israel. He can be reached by email at josh@universaltaxprofessionals.com which specializes in helping Americans living abroad with all their tax and accounting needs. Joshua was born in Cleveland, Ohio and is now living in Europe. He worked at several large accounting firms until he realized he could provide clients better service at lower prices. Feel free to send him an email at josh@universaltaxprofessionals.com.

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