Did you know that some countries have much lower corporate tax rates compared to others? It doesn’t matter whether you call it company tax, corporation tax or corporate tax, this specific direct tax must be paid in most countries.
However, there are many countries where you don’t have to pay corporate tax at all as well as countries with very low corporate taxes. If you are tired of paying high taxes on the capital or income of your corporation (or similar legal entity), then you should check our list of 25 countries with lowest corporate tax rate.
- Getting familiar with the basic characteristics of countries with lowest tax rates
- Learning more about their tax systems
- Discovering business opportunities in countries around the globe
No company should be paying more taxes than necessary. Moving your business venture from one country to another or establishing a company abroad is now easier than ever. If you are planning on doing something like this in order to get more favorable corporate tax rates, keep reading because we have created a list of 25 countries with lowest corporate tax rates.
1. Hong Kong
Location: Asia
Capital City: Hong Kong
Currency: HK dollar
Corporate tax rate: 8.25% – 16.25%
For many years, fishing and farming were the basis of the economy of this region. It was the British that turned this tiny group of villages into a financial center. Hong Kong was under British rule for a long time, but back in the 1990s, it was returned to China. The good thing is that the authorities in China have decided to grant special status to this region which means that free trade and economy is allowed here.
Hong Kong is now one of the liveliest cities in Asia when it comes to business and finances. They have an excellent infrastructure and great economy and it’s a good place for offshore renminbi (Yuan) trading. When it comes to corporate tax rates, there are actually two rates – 8.25% which is applied to the income of corporations that doesn’t exceed 2 million HK dollars (around 230.000 Euro). If this amount is higher, then the company can expect a tax rate of 16.25%.
What’s even better is that foreign nationals can create offshore companies too. These companies can be owned by foreigners, there’s no need to include a Chinese national. The corporate tax rate for offshore companies founded in Hong Kong is 0%.
2. Macedonia
Location: Europe
Capital City: Skopje
Currency: Denar
Corporate tax rate: 10%
It’s good to know that this list of countries with lowest corporate tax rate includes countries located on different continents. Macedonia for example, is a country which is situated in Southeastern Europe. This land-locked country is settled on a crossroad between Greece and Serbia and between Bulgaria and Albania.
For many years, Macedonia is trying to become a regional center where the business interests of legal entities from the surrounding countries and around the globe will meet each other and it seems that in the last few years they are going to achieve this goal. Ten years ago, the government has decided to open up the economy to foreign investors. They have eased the laws and regulations allowing foreign companies to invest in the country. At the same time, Macedonia has reduced the taxes including corporate tax which is now set at 10% regardless of the size of income.
There are two airports and a decent network of highways as well as specially designed zones where foreign companies can start their ventures without investing too much money. All in all, this is not just one of the countries with lowest corporate tax rate, but also a country with great potential.
3. Andorra
Location: Europe
Capital City: Andorra la Vella
Currency: Euro
Corporate tax rate: 10%
Duty-free shopping – this is probably the first thing that comes to the mind of many people when someone mentions Andorra. This microstate is located in the central part of the border between France and Spain. The government of this country has figured out that one of the simplest ways to improve the living of its people in this tiny country is to liberalize their economy.
Andorra is still considered to be a tax haven by many experts although the European Union has made some moves that have forced Andorran authorities to come up with stricter laws related to bank secrecy, tax evasion, and similar things. Yet, this didn’t affect the tax rates in this country where the corporate tax rate is just 10%. You can expect the same rates for income taxes in general too.
Andorra is a country with a good economy. Tourism is still the most important part of their economy, but they also have a strong banking sector. Opening a company in Andorra is relatively easy and foreign investors will have to wait for up to 4 weeks to complete this procedure which requires minimum share capital of 3000 Euro for LLCs.
4. Qatar
Location: Asia
Capital City: Doha
Currency: Riyal
Corporate tax rate: 10%
Did you know that the income tax rate in Qatar is 0%? That’s great news for individuals, but businesses that want to move their operations here should be prepared to pay 10% in corporate tax. This rate makes Qatar one of the best countries with lowest corporate tax rate.
Today, Qatar is one of the most powerful economies in the world if take a close look at their GDP per capita. These amazing results come as a result of the exploitation of natural gas and oil in this country. In the past decade, the authorities have invested a lot in the tourism sector, but the energy sector, as well as their financial sector, remains to be the pillars of the Qatari economy.
Foreign nationals will find it easy to establish a company in this country. You can do business there with the help of a local entity in the form of a completely foreign-owned company, joint venture company or special free zone company. Regardless of the option you choose, the income tax rate stays the same – 10%.
5. United Arab Emirates
Location: Asia
Capital City: Abu Dhabi
Currency: Dirham
Corporate tax rate: 0%
It might sound a little bit odd, but there are countries in the world which don’t impose the corporate tax. The United Arab Emirates is one of these countries and that’s why we have included this Asian country located on the Arabian Peninsula on the list of places with lowest corporate tax rate.
The UAE doesn’t cover a large area and it doesn’t have too many residents. Yet, their rich oil reserves have made this country a powerful player on the global scene. The government of the UAE knows that relying on just one resource that is limited is a risky move and that’s why they have tried to diversify their investments in other sectors too.
One of these sectors is tourism. Their most populous cities including the capital city Abu Dhabi as well as Dubai are attracting people from all over the world. They have built magnificent structures in the last two decades. At the same time, the UAE is located in a convenient place where the East and West can meet in the middle.
The good thing about the UAE is that this country has a free economy and many financial reports have confirmed that. Their economy is fueled from oil income and this is the reason why the taxes are low (or no existent). As we have already mentioned, the corporate tax rate is 0% and the same goes for regular income tax. They only have value added tax, but the rate is very low – just 5%.
While it’s true that it’s not a simple task to become a citizen or a permanent resident of the United Arab Emirates, it’s also true that you can get a visa and establish a company there without any hassles. You can opt for an offshore company if you want to. This country is focused on attracting investors from all countries around the world.
6. Bermuda
Location: North America
Capital City: Hamilton
Currency: Bermudian dollar
Corporate tax rate: 0%
It’s not unusual to find a few island nations on a list of countries with lowest corporate tax rate. Bermuda definitely belongs to this group of countries. A popular tourist hotspot, Bermuda attracts thousands of tourists (mostly American citizens) on the white sandy beaches. Keep in mind that Bermuda is not an independent country – it’s a British Overseas Territory, a region with a special status which allows a high level of self-governance.
When it comes to offshore business, Bermuda plays a significant role. Around 5% of offshore funds in the world are stored in Bermuda. We can’t say that this region has a powerful economy, but they have managed to overcome the global financial crisis without any problems. In other words, there’s a certain level of safety when you are doing business in this country.
Of course, the best part about it is the fact that there is no corporate tax there. That’s probably why a few thousands of legal entities with foreign origins are located in Bermuda.
7. Kuwait
Location: Asia
Capital City: Kuwait City
Currency: Kuwaiti dinar
Corporate tax rate: 0%
As you are probably aware, the Gulf region is rich in oil and that’s why many of the countries there have strong economies. One of these countries is Kuwait. This is a small country with excellent oil reserves which is why Iraq has tried to occupy Kuwait two times in the past. Fortunately, these episodes of instability in the region are over and Kuwait is making great progress.
Kuwait is visited by many foreign nationals. Many of them are working there. According to the last censuses, almost 70% of the people who live there are born in a foreign country. So, if you want to live there or launch a company you won’t be alone because many people have already this opportunity.
The corporate tax in Kuwait is 0% just like the income tax in general. The only downside that you can expect here is the difficult process of establishing a company there. Their laws and regulations are created in a way which allows only companies with a high budget to establish their presence here. However, starting a joint venture with Kuwaitis should be easier.
8. Hungary
Location: Europe
Capital City: Budapest
Currency: Forint
Corporate tax rate: 9%
Hungary is one of the EU members that have not adopted the Euro as a currency, but it seems that this didn’t stop many foreign investors to choose this country as a place where they will launch new businesses. With a corporate tax rate set at 9%, this is one of the European countries with lowest corporate tax.
For many years, Hungary is part of the EU and this country is known as a place where you can find skilled labor force and excellent human development index. Of course, the capital city Budapest is the major financial hub in this country. Setting up a company in Hungary doesn’t last longer than 4 weeks and you don’t need to meet any special criteria to open a company.
9. Gibraltar
Location: Europe
Capital City: Gribraltar
Currency: Gibraltar pound
Corporate tax rate: 10%
Gibraltar is a British Overseas Territory situated at the southwestern part of the Iberian Peninsula. This place has an interesting history and in the recent period, it is becoming quite popular among business persons looking for countries with low corporate tax rates.
The corporate tax rate of 10% certainly makes this place a good destination for people around the world. Gibraltar might be a small place, but it’s used by many foreigners for offshore banking and company registration. This region is especially popular among bookmakers and casinos die to the liberal legislative.
10. Montenegro
Location: Europe
Capital City: Podgorica
Currency: Euro
Corporate tax rate: 9%
It seems that there are quite a lot of countries that come from the former eastern socialist block that have excellent tax systems. Another example of these countries with lowest corporate tax rate is Montenegro with a corporate tax rate of just 9%.
Keep in mind that Montenegro is not a member of the European Union, but they use the Euro as official currency. In addition, they have the status of a candidate that will (hopefully) soon join the EU. Services and tourism are the main sectors in this country’s economy. Export and import of goods and foreign investments keep their economy thriving. It’s interesting that both US and Russian investors are present in this small Balkan nation.
11. Bahrain
Location: Asia
Capital City: Manama
Currency: Bahraini dinar
Corporate tax rate: 0%
It’s impossible to beat the corporate tax rate present in Bahrain. Namely, this is one of the few countries in the world where this rate is set at 0%. Bahrain is a small country, but it has one of the strongest economies in Asia. Of course, the main source of income in this country is oil processing.
Just like other countries in this part of the world, Bahrain has well-developed and established financial and banking services. They have done their best to allow foreign investors to come to this country. The process of starting a company here is very simple and prospective business owners can choose from a few different types of companies including LLCs.
12. Paraguay
Location: South America
Capital City: Asuncion
Currency: Guarani
Corporate tax rate: 10%
When people are talking about economy and finance in South America, they are usually focused on Brazil, Chile, and Argentina, but it seems that Paraguay deserves to be on this list too. One of the reasons for that is the low corporate tax rate of just 10%.
This country is rich in minerals and it also has well-developed agriculture. There are over 100 foreign companies that are registered in Paraguay and the authorities are encouraging business people from all over the world to invest in this South American country. It’s good to know that unlike many other Central and South American countries, the political situation in this country is stable.
13. Macau/Macao
Location: Asia
Capital City: Macau/Macao
Currency: Macanese pataca
Corporate tax rate: 12%
Although Macao (or Macao as some people call it) is not an independent country, it holds a special status within China. Macao became part of China in 1999 when the lease deal between China and Portugal has ended.
In the past, this region was covering a few small fishing islands. Today, this is a modern city which is known as one of the hotspots for gambling tourism. The corporate tax rate of 12% might not be the lowest in the world, but it’s still low and attractive especially because founding a company here is easy and you can expect 0% income tax.
14. Anguilla
Location: North America
Capital City: The Valley
Currency: Eastern Caribbean dollar
Corporate tax rate: 0%
Anguilla is part of the Organisation of the Eastern Caribbean States and a British overseas territory located in the eastern part of the Caribbean. With just 15.000 residents, this is a small group of islands, but what makes Anguilla interesting is its status of a tax haven.
You should not expect any estate, capital gains, sales, profit and of course – corporate taxes here. It’s good to know that back in 2011, this small territory has to introduce a low property tax (0.75%) and a special form of income tax (3%). They had to this to cover their deficit, but this is still an excellent place for offshore investments.
15. Saint Kitts and Nevis
Location: North America
Capital City: Basserterre
Currency: Eastern Caribbean dollar
Corporate tax rate: 0%
There are many countries with lowest corporate tax rates which are located in the Caribbean and Saint Kitts and Nevis is one of them. This is a tiny independent country which was under British rule for a long time (they’ve become independent in 1983).
Tourism and agriculture are the main industries in this country. For many years now, St. Kitts and Nevis encourage foreign citizens to obtain citizenship from this country by investing on the islands. As a matter of fact, this is the first program like this in the world. Many people use this opportunity because St. Kitts and Nevis have no corporate and income tax. There is no VAT either.
16. Saudi Arabia
Location: Asia
Capital City: Riyadh
Currency: Riyal
Corporate tax rate: 5%
Saudi Arabia is one of the countries with the most powerful economies thanks to their huge oil reserves. Investing in an absolute monarchy might seem like an unattractive thing for many people, but the fact is that business can benefit greatly by redirecting their business operations here.
Keep in mind that this country has the largest economy in the Middle East. Starting from 2018, foreign nationals can own 100% of their companies established in Saudi Arabia. So, you have a chance to own a company in a growing market, but what’s even more important is this case is that the corporate tax rate is just 5%.
17. Cayman Islands
Location: North America
Capital City: George Town
Currency: Cayman Islands dollar
Corporate tax rate: 0%
The Cayman Islands represent an autonomous British Overseas Territory. Situated in the western part of the Caribbean Sea, this country is often mentioned as one of the best tax havens in the world. At the same time, people often highlight this country on lists of countries with lowest corporate tax rates.
The Cayman Islands are especially popular among American business owners. Thousands of companies have been registered here in the last twenty years. This makes sense because the corporate tax here is 0%. The same goes for income taxes, capital gains taxes and VAT.
18. Cyprus
Location: Europe
Capital City: Nicosia
Currency: Euro
Corporate tax rate: 5%
When we compare the corporate tax rate in Cyprus with the same tax rate in many Caribbean and Gulf countries we will notice that this rate is much higher in Cyprus. Yet, when it comes to European countries Cyprus has one of the best corporate tax rates.
Another reason why someone would want to move their business ventures in this country is the fact that Cyprus is part of the European Union and this country has a strong influence from the UK. On the other side, many foreign investors from both Western Europe and Russia are present in this market due to the favorable business climate found in Cyprus. Creating offshore companies here is extremely easy and you can keep your anonymity to a certain level.
19. Liechtenstein
Location: Europe
Capital City: Vaduz
Currency: Swiss franc
Corporate tax rate: 12.5%
Liechtenstein is one of the smallest countries in the world. It’s situated between Switzerland and Austria and it’s known as a country with one of the best GDP per person in the world. For a long period of time, Liechtenstein was considered to be a tax haven for rich people and companies that were trying to avoid taxes, but this is no longer the case.
The authorities of this small landlocked country have promoted stricter laws and regulations, but this didn’t turn the investors away because they have kept the taxes low. For instance, the corporate tax rate is 12.5% while the income tax is 3%. They also have a very low VAT rate – between 2.5% and 7.7%.
20. Bosnia and Herzegovina
Location: Europe
Capital City: Sarajevo
Currency: Convertible mark
Corporate tax rate: 10%
What was once a war-torn country is now a promising investment region. To be honest, Bosnia and Herzegovina is still a developing country where the political climate is not very favorable, but for those willing to take a risk, it’s a country worth consideration.
The corporate tax rate here is just 10% making Bosnia one of the countries with lowest corporate tax rate in Europe. Transport, communications, and tourism are the three most important sectors that are driving the economy of this Balkan nation. Austria, Russia, Germany, and the Netherlands are some of the countries with the highest investments in Bosnia.
21. The British Virgin Islands
Location: North America
Capital City: Road Town
Currency: US dollar
Corporate tax rate: 0%
The BVI (the British Virgin Islands, known as the Virgin Islands, might be British overseas territory, but they are using US dollars as currency. There are more than 50 islands in this country where around 28,000 people live. BVI residents have British citizenship too. That’s why many UK companies have moved their operations here in the last 30 years.
The British Virgin Islands are a popular tax haven and a holiday destination. They have a good economy and excellent tax system which doesn’t have corporate tax or income tax. Around half of the offshore companies on our planet are formed there. They have signed a few treaties and acts in the recent period which helped them getting blacklisted by other countries due to tax evasion and bank secrecy.
22. Guernsey
Location: Europe
Capital City: St. Peter Port
Currency: Pound sterling and Guernsey pound
Corporate tax rate: 0%
Technically, Guernsey is an autonomous island located in the English Channel. Their foreign policies and defense are managed by the UK. However, they have their own legislation and they are free to choose the rates of taxes. So far, the authorities in Guernsey have decided to keep the corporate tax rate at 0%.
Around 40% of the GDP of this country is covered by the financial services including insurance and banking. The absence of income tax and corporate tax, as well as no duties, make Guernsey an excellent offshore center used by many UK business owners.
23. Ireland
Location: Europe
Capital City: Dublin
Currency: Euro
Corporate tax rate: 12.5%
If you take a look at the numbers, you won’t find many economically developed and stable countries like Ireland where the corporate tax rate is 12.5%. This is an open economy which is part of the European Union. The economy of this country had its ups and downs, but we can freely say that they are a stable country.
The favorable taxation policy which was introduced in the late 1990s, when the corporation tax rate was cut from 32% to 12.5% contributed to the development of this country’s economy. There are some experts that claim that Ireland is nothing more than a corporate tax haven, but the truth is that company owners that are operating from this place don’t mind that.
24. US Virgin Islands
Location: North America
Capital City: Charlotte Amalie
Currency: US Dollar
Corporate tax rate: 10%
The United States Virgin Islands, or Virgin Islands of the United States as some people call it, is located in the eastern part of the Caribbean and they represent an unincorporated US territory. The residents of this county are US citizens.
When it comes to tax and duties, this region has the right to set their own rules. That’s why the corporate tax here is set at 10%. The citizens of this country are not paying for US federal income taxes either.
25. Jersey
Location: Europe
Capital City: Saint Helier
Currency: Pound sterling
Corporate tax rate: 0%
Jersey has a status of a Crown dependency which means that this is a semi-autonomous region which has close ties with the United Kingdom. There are one main island and a few small uninhabited islands in this region. The population of this island is around 107.000.
Jersey is not part of the EU. They have a zero corporate tax regulation. For many organizations, this is a European tax haven. However, the European Union didn’t have any objections to their requests sent to the authorities of this country regarding taxation info. Today, Jersey is a popular offshore and financial center. Many individuals and corporations with relatively high net worth are based in this country. The authorities of this country are trying to encourage even more foreign investors to come to this island by cutting tax rates and simplifying the procedure of company formation.
