Income tax is a concern for any working class individual or income generating business. Businesses consider the tax returns of any country before opening a branch there. International businesses and governments pay a lot of attention to business taxes for good reasons. Individuals would also be wise to look into the percentage of their income that is taxable before moving to the new country especially via work permits. Personal income tax is a good factor for such individuals. There are countries known as tax havens where the tax is zero while some countries tax as much as 60% of your income.
The ranking is calculated by the World Economic Forum (WEF). WEF publishes a global competitiveness report on the state of the world’s economies. It uses the total tax rate as a measure of how competitive a country is. The total tax rate is defined by the World Bank. It states that “the total amount of taxes is the sum of five different types taxes and contributions payable after accounting for deductions and exemptions: profit or corporate income tax, social contribution and labor taxes paid by the employer, property taxes, turnover taxes and other small taxes”. In essence, it accounts for taxes paid by the employer but not the employee.
According to the 2016 report, below are the top 10 countries with the lowest tax:
- Brunei: 8.7% — Brunei, one of the smallest countries in the WEF report with a population of about 0.4 million, is also one of the most competitive, coming in at 58th overall. The nation has its institutions, infrastructure and macroeconomic environment as the pillars of its economy.
- Qatar: 11.3% — Qatar, which comes in at 18th for overall competitiveness, manages to edge out the region’s other oil-rich states but still comes second to low taxes. It’s restrictive labor regulations are cited as the country’s most problematic factor.
- Macedonia: 12.9% — Former Yugoslav nation Macedonia has incredibly low tax rates. It comes in at 68th in…