There are many countries in the world where income tax is not imposed.
Every working person waits for the first day of the month. When the salary comes into the account, the face glows, but when the eyes fall on ‘tax deduction’, the same glow fades. We Indians often think that our tax burden is very high, but do you know that there are some countries in the world where the government does not take even a single rupee of your earnings? At the same time, there are some countries where more than half of your earnings go to the government treasury.
Not a single penny has to be paid in the name of tax in these countries
First of all, let us talk about those countries which are no less than heaven for any taxpayer. The name of United Arab Emirates i.e. UAE comes at the top in this list. This country with cities like Dubai and Abu Dhabi is very popular among Indians. The biggest reason for this is that there is no income tax on salary here. Whatever you earn, all of it goes into your pocket. This is the reason why professionals from all over the world are drawn here.
Not only UAE, but its neighboring countries are also not behind in this matter. Saudi Arabia is also included in the list of tax-free countries. Here neither income tax nor capital gains tax has to be paid. Kuwait’s system is considered even better because here, along with income tax, there is no inheritance and gift tax. This is an excellent option for those living abroad for a long period.
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Similarly, in Bahrain and Qatar also the government does not keep an eye on your earnings. In Bahrain, the government earns its income through indirect taxes, making it a suitable place for small businessmen and startups. At the same time, in Bahamas also there is no hassle of income, gift or capital gains tax. Here the government fills its treasury through VAT and stamp duty.
However, Oman is on its way to becoming an exception in this list. At present it is tax-free, but there are reports that preparations are underway to impose 5% tax on the high income group from 2028. Still, the rate of 5% is negligible compared to the rest of the world.
These governments take half of the income here
Now look at the other side of the picture. If you are impressed by the glamor of the prosperous countries of Europe, then the tax system there may surprise you. The highest income tax in the world is collected in Finland. It may be hard to believe, but the highest tax rate there is 57.65%. That means the government takes more than half of your earnings.
Just behind it is Japan, where this rate is 55.95%. The tax burden is also very high in other European countries like Denmark (55.9%), Austria (55%) and Sweden (52%). Even in countries like Belgium, Israel, Netherlands and Portugal, people pay 48% to 50% of their hard-earned money as tax.
If we talk about London (UK), then one has to shell out money there too. Tax rates in London depend on your income slab, starting from 20% and going up to 45%. Apart from this, 20% VAT is charged separately on every item there. That means both living there and earning money is an expensive deal. Tax rates in Germany, France and Australia are also around 45%, which is considered quite high.
What is the condition of America, China and neighboring countries?
The maximum tax rate in America, the world’s largest economy, is 37%, which is a bit of a relief compared to European countries. At the same time, our neighbor China is ahead of India in tax collection, the maximum rate there is 45%. If we talk about other neighboring countries of India, this rate is 35% in Pakistan, Indonesia and Mexico. In Bangladesh it is 25%, which is comparatively less. There are some countries in the world where taxes are levied, but very less. For example, the highest rate in Guatemala is only 7%. In Kazakhstan, Romania and Serbia it is 10%, while in Russia the tax is 13%.