Top Tax Havens Of The World

Tax havens are defined as countries that provide foreign investors with low or zero tax rates and attractive regulatory policies. They are typically small,

and often not the final destination of foreign direct investment. Instead, they tend to serve as conduits for investment in foreign subsidiaries located in other

countries. Tax havens have often been viewed as providing bank secrecy and thereby allowing tax evasion to occur. In this blog, we will look into the Top 9 Tax Havens in the world that opens up an opportunity for Indian entrepreneurs to incorporate business and save on taxes. 

PS: You can’t find UAE and Saudi Arabia on this list as they decided to charge income tax from Jan 1^st, 2018.

1. Bahamas

• There is no income tax, capital gains tax, capital transfer tax or estate tax.
• Employed people pay national insurance contributions. 3.9% of the salary is paid by the employee and 5.9% paid by the employer. Those who are Self-employed have to pay the whole amount by themselves.
• A value-added tax (VAT) of 7.5% was introduced on 1 January 2015.  Stamp duty is payable on property and mortgage transactions, and there is a tax on real estate.
• Duties are high on most imported goods.

2. Bahrain

• The taxes that are paid in Bahrain are minimal and there is no income tax system. However, a small tax has been imposed on workers as a ‘social insurance tax’. This tax is applicable to all workers and amounts to 1% of the total salary earned.
• An additional 5% contribution has to be paid by workers as a social security contribution.
• Municipal tax is one that must be paid by all those in rented property and expats will have to pay a 10% fee (based on the value of the property) to the local authorities.
• There is no equivalent of Value Added Tax except on the sale of fuel, and a charge of 12% is made.

3. Bermuda

• There is no direct income tax or capital gains tax in Bermuda. There is a system of payroll tax where employees pay a minimum of 4.75% of their salary.
• Employed people have to pay Social security contributions of $30.40 each week. This amount is then matched by the employer.
• There is no sales tax in Bermuda.
• There is also no VAT applied to goods and services.

4. Cayman Islands

• There is no direct tax imposed on residents and companies.
• Duty is levied against most imported goods, which basically falls in the range of 22% to 25%. Some items are taxed at 5% and some are exempted from taxation such as baby formula, books and cameras.
• The government charges flat licensing fees on financial institutions that operate in the islands and there are work permit fees on foreign labour.
• There are no taxes on corporate profits, capital gains, or personal income.

5. Kuwait

• Basically, there are no personal taxes, not even for expats working in Kuwait.
• Only foreign companies working in Kuwait are liable to pay income tax. The corporate income tax rate for foreign businesses currently is a flat 15%. Kuwaiti-owned businesses are exempted from this tax.
• As of now there is no value-added tax, either. However, there are discussions going on about introducing it.

6. Monaco

• There is no direct taxation as such in Monaco. However, two exceptions are there:
  • Companies earning more than 25% of their turnover outside of the Principality and companies, whose activities consist of earning revenues from patents and literary or artistic property rights, are subject to a tax of 33.33 % on profits.
  • French nationals who cannot prove that they resided in the country for 5 years before October 31, 1962 also need to pay tax.
• There is no income tax for people residing in Monaco (except French nationals).
• There is no direct tax on companies apart from the tax on profits mentioned above.

7. Oman

• There is no income tax for salaried or self employed people.
• There are deductions made from salaries for social security contributions. People working in the private sector have to make contributions of 6.5% of their salary. Employers add 9.5% to these contributions.
• Stamp duty is charged when purchasing real estate at a standard rate of 3% of the sale price.
• Oman’s major taxation revenue comes from corporate tax. Companies are subject to all the taxes that do not apply to individuals such as capital gains, income and on dividends.

8. Qatar

• Qatar has no system of personal income tax, value-added tax (VAT) or capital (wealth) tax.
• The only taxes payable are:
  • Corporation Tax which is applicable mainly to foreign companies.
    Import duties are imposed on essential items mostly at a rate of 4% of the value of the products.
  • There are service tax of 10% and government levy of 5% on restaurant and hotel bills.
• Corporation tax is payable on a progressive scale for income above QAR 100,001, from 10% up to a maximum rate of 35% for income above QAR 5 million. There are a number of allowable deductions including interest payments, salaries, rentals, depreciation etc.
• Self-employed foreign persons working in Qatar also need to pay tax on their income.

9. Brunei

• No Personal Income Tax system is present in Brunei.
• There are no social security taxes. However, all citizens must contribute 5% of their salary to a state-managed provident fund.
• The tax rate for resident and non-resident companies is 18.5 percent.
• Tax and investment privileges are provided to SMEs. The following types of business are eligible for the tax exemption:
  • imported raw materials and machinery for SMEs,
  • food industry for the export and domestic market
  • industries that use marine resources