There is an eternal debate between the need to pay taxes to contribute to social welfare and the personal desire to prevent the Treasury from reducing the money that is obtained as a result of work. Ethical and legal issues can be discussed, but the truth is that many fortunes end up being taxed in tax havens.
It should be noted that each State is free to regulate its own tax system. Furthermore, the fact that few taxes are paid in a country does not mean that it is necessarily a tax haven. This is explained by the agreements that have been established between different fiscal sovereignties.
A clear example of a country with low taxation, but which is not considered a tax haven, is Andorra. Although the tax burden is reduced in Andorra, the country does agree to collaborate and exchange information with other States.
Thus, we can speak of a tax haven when we find ourselves with a lack of transparency. This occurs in opaque countries that end up becoming a haven for funds from illegal activities.
Therefore, in order to classify a country as a tax haven, said State must meet a series of specific characteristics. In this sense, tax havens are characterized by being not very transparent in tax matters, by offering low levels of taxation, by their little or no international cooperation in tax matters and by facilitating tax reductions for those who do not carry out any kind of economic activity in his territory.
Countries with lower taxation may choose to establish low levels of taxes or even not have an income tax established. Next, we present the cases of the countries in which the least taxes are paid, regardless of whether or not they are tax havens.
The Caribbean Sea is a scenario populated by various archipelagos in which various tax havens are found. Let us take as a first example the British Virgin Islands, an archipelago of volcanic origin whose main economic activity is tourism.
Although the British Virgin Islands are under the sovereignty of the United Kingdom, the most used currency in the archipelago is the US dollar. But, in terms of taxes, this area stands out for not having corporate tax or income tax. In fact, this tax haven does not even have established inheritance or transfer taxes.
Also in the Caribbean are the Bahamas. Banking and the tourism sector are the activities that make up the axis of its economy. As in the British Virgin Islands, there is no income tax. However, workers do contribute to the country’s Social Security coffers with small amounts that the State deducts from their payroll.
The necessary condition to be able to reside in the Bahamas and benefit from its low taxes is to invest in the country 500,000 dollars in property and have a high level of income.
Not far from the Bahamas are the Turks and Caicos Islands, where taxes such as inheritance tax or income tax are conspicuous by their absence. Fishing, tourism and the financial sector are the mainstays of an economy that is classified as a tax haven.
However, residing in the Turks and Caicos Islands and accessing its reduced taxation means meeting the requirement of investing half a million dollars in properties in the archipelago.
The famous Cayman Islands
An archipelago widely famous for its historical status as a tax haven is the Cayman Islands. Offshore companies have a significant importance in its economy, although tourism is its main economic activity.
The Cayman Islands not long ago ceased to be considered a tax haven due to its very low taxation, as they have begun to collaborate internationally in tax matters. However, given the very low tax burden in the Cayman Islands, anyone wishing to reside there will face a high cost of living and a large initial investment in property.
Oman, located in the southeast of the Arabian Peninsula, is a country whose main economic activity is the export of gas and oil. Thanks to the large income from oil exports, the sultanate eliminated the income tax that its subjects had to pay.
However, Oman has implemented large indirect taxes on the consumption of beverages (50% on soft drinks) and tobacco, which must pay 100%. In this way, the sale of oil does not become the only source of income for public coffers.
Another economy based on oil exports is Qatar, one of the countries with the highest GDP per capita. In the small but rich emirate, the only tax that must be paid is the social tax set at 5%. In fact, Qataris do not have to pay taxes on income or dividends. Even companies operating in Qatar benefit from low corporate tax.
As in Oman and Qatar, in Kuwait the public sector budget is almost entirely fueled by oil exports. In the small Arab country that borders Iraq and Saudi Arabia, the fiscal pressure will not come in the form of taxes, but through payments to Social Security by workers and employers.
Another common element in Oman, Qatar and Kuwait is the great difficulty in obtaining a long-term residence permit.
Monaco and Brunei
Glamor and celebrities are something that abound in the Principality of Monaco. Although it is no longer defined as a tax haven, there are no direct taxes in Monaco. So, no income tax or profit tax.
In this way, the only fiscal pressure that Monegasques bear are contributions to Social Security. In order to benefit from its fiscal peculiarities, it is enough to reside in the principality for 6 months and 1 day in the period of 1 year. As a result, many European fortunes have moved to Monaco.
Located in Southeast Asia, on the island of Borneo, is the State of Brunei. Endowed with abundant raw materials such as oil and natural gas, the Sultanate of Brunei is considered a tax haven.
Given the substantial income provided by the exploitation of its natural resources, the only burden that its subjects must bear are small amounts that are deducted from their payroll to provide income for Social Security. However, residing in Brunei for a company is more than difficult, as the authorization of the sultan is required.