Dateline: Kuala Lumpur, Malaysia
When we think about countries with no income tax, our brain often goes to the Cayman Islands: The British overseas territory, Saint Kitts and Nevis the island nation, or Europe, where a web of historical treaties, legal exemptions, and whatnot has created many areas exempt from taxation.
But one of our goals here at Nomad Capitalist is to broaden the range of choices available to us, so today we are going to look beyond Europe and the Caribbean and reveal to you the tax-free countries in Asia.
To paint an area of 4.703bn people with an extremely broad brush, many of the countries have only recently industrialized. So, oftentimes, they don’t have the weight of the past way of doing things holding them back.
As such, many of the assumptions we usually make for emigration are turned on their head.
As a general rule of thumb, Asia is a difficult place to get citizenship but easy to immigrate to if you have money.
The Asian economy is usually entrepreneurial so they’re all too happy to let you in if you can help the local economy.
Given the wide range of choices available, with some proper planning, it can be very tax-friendly.
While we usually break things down and talk about individual countries, in this article we are going to look at each type of tax policy.
It is the far more useful thing to do when analyzing an area as vast and diverse as Asia.
So, without further ado, here are the type of tax-free countries in Asia and where you can find them:
One of the primary reasons a country might decide to have a zero tax policy is because they want to incentivize entrepreneurship, and/or they have income from other sources and don’t need the personal income tax revenue.
Both of these are often true in the Middle East, where an abundance of oil and an exceptional oil and gas industry positioning has created very wealthy states without having an immediate need for income taxes or taxes for all that matters.
As the world is increasingly shifting away from oil though, countries want to have other means of funding themselves, which usually means that they want to promote entrepreneurship.
So, while the Middle East might not be the first place you think of when you look at Asia, it is home to many of the tax-free countries in Asia and the world – including Bahrain, Kuwait, and the UAE (home of both Abu Dhabi and Dubai).
Whether you would want to live in many of these countries is another matter entirely, as some are very traditional and Westerners that can’t speak Arabic might not feel at home.
I personally wouldn’t want to live in Kuwait, for example.
If the Middle East doesn’t appeal to you, you can also go to Brunei in Southeast Asia.
But many of the same problems apply. I’ve only spent a few hours there, did my business, and left.
I wasn’t particularly convinced that it was a good place to live there either, so I will instead give you my first choice for Asian countries at this tax level.
My Personal Choice – The UAE
A good middle ground between exotic and Western creature comforts is the UAE.
It’s well-used to foreign influence and English is widely spoken.
We even have an extensive guide on living in Dubai the no income tax country.
Overall, I think with the UAE corporate income tax rate of 0% plus all the other good points make it interesting enough to check out.
But like many places, there are some problems you can come across in the UAE. For example, it’s not particularly designed for a solopreneur.
Instead, foreigners living there can be divided into two broad groups:
- Low-skilled construction workers, often coming from places like India and Pakistan who are borderline slave labor.
- High-tier white-collar corporate workers, who are primarily there because of a temporary job posting and have no intention of living there long-term beyond the duration of their employment.
Because of this, sometimes eyebrows are raised when you try to go through bureaucratic procedures and they ask you for your employer and salary.
Then, when you answer that you own your own company and the salary is whatever you choose, it adds complications to the mix.
Territorial Tax Countries
What Are They?
Now, here’s an option that people don’t often consider. For the average person, taxes are binary – you either live in a tax haven or you don’t.
But life is far messier and it does us no favors to simplify matters so completely to lose sight of all the wide spectrum of options available to us.
A country with no tax system tend not to be the strongest geopolitical players.
They are often one of many similar countries trying to gain an economic advantage.
As such, in a bid to receive foreign investment and capital gains, they have taken the pragmatic approach.
Even if they wanted to, they know that they don’t have the capacity to go for your income abroad and if they tried you could simply move elsewhere.
So, what they do is simply tax the economic activity which happens locally.
This means that your foreign-sourced income isn’t taxed, but if you were to buy a local apartment and rent it out, it would be.
The same applies if you buy a water bottle in a local store and you have to pay a VAT.
Because of this, most locals would not classify their country as a tax haven because their economic life happens most (if not entirely) within the country.
As such, they do not benefit at all from the government’s tax policy.
However, the wealthy and mobile foreigners from all over the world see these beneficial tax policies and decide to go where they are treated best.
It’s a win-win for both parties: expats get to live in a desirable country with very few taxes beyond the taxed goods that they buy, while the governments get a stimulus to their local economy.
From a political standpoint as well, it’s a smart move.
Given that the locals are likely not aware of the territorial nature of their taxes, these policies can be enacted without summoning an angry mob.
Hong Kong is one of these “tax-free” countries in Asia and it’s among one of the best countries with a territorial tax system, though it’s not my personal preference.
The rest of the tax free nations that follow are mostly located in Southeast Asia – Singapore, the Philippines, Malaysia, and Thailand.
But this is not a “plug and play” system, wherein you can just get a visa and live in the country without a concern in the world.
Each one is unique and will require you to investigate their specific nuances.
For example, in Thailand, money that you remit to yourself is taxable in that year.
As such, while the bulk of your wealth might be locked away in a foreign corporate account and you may pay yourself to an offshore account, the second it reaches Thai territory it becomes taxable.
Whether these are valid options for you primarily depends on how your assets and your income are structured.
It might be Thailand’s corporate tax rate or the Singapore corporate tax rate that works best for you.
However, If you have any business with these countries, it might be worth looking elsewhere, or accepting that you won’t live entirely in a zero tax country.
And The Winner Is… Malaysia
Nomad Capitalist fans probably guessed the winner before even looking at the headline.
It’s no secret that Malaysia – and more specifically Kuala Lumpur – is my top pick as I personally include it as part of my Trifecta strategy.
The tropical climate, diverse wildlife, and many beautiful beaches, islands, and other natural attractions draw many tourists to the country.
It also means that, when living here, you would never get bored in this diverse country.
All in all, it’s rather easy to enjoy your time here, and even easier to get permission to live here.
The only major requirement to get a 10-year residence permit is to have RM300,000 (c.$70,000) in the bank, which gets halved to RM150,000 if you’re over 50, as well as having a monthly income of RM10,000 (c.$2,500) or more.
Enjoy Personal Income Tax-Free Countries in Asia
Asia is the continent of the future – all the pieces are set up for an extraordinary rate of development over the next few decades.
As a general rule, Asian countries are often eager to accept foreigners with income to spend and will make their lives rather straightforward.
It may take the form of a zero income tax or a territorial tax system, but when planned for correctly, it roughly means the same.
At the end of the day, you get to live in countries with no taxes at all in Asia and enjoy the abundant life that these countries offer to expats and nomads alike.
Countries Without Taxes Around The World
And if none of the countries on this list piqued your interest, you can always read up on low tax countries in Europe or other countries with low tax countries in the world, or even countries without taxation at all.
Here are just a few of the articles on our site for your perusal:
- How To Legally Lower Your Taxes
- Get Second Residency and Pay No Tax In These 18 Tax-Free Countries
- The Best Tax-Free Countries for Americans
- The Best Tax-Free Countries in the Americas
- The Trifecta: How to Travel Less as a Tax-Free Nomad
- Escape the Rat Race to Become a Tax-Free Global Citizen
- How to Get Cayman Islands Residency and Pay Zero Tax
- The Zero-Tax Citizen: Tax-Friendly Second Passports
- Residence Planning for Lower Taxes: 6 Ways to Use Zero Tax Residence
- Seven Tax-Friendly Countries for High-Net-Worth Individuals
Countries with Low Income Tax – FAQs
How do tax free countries work?
Tax free countries are not always completely tax free. They might charge a lower tax rate than other countries. These countries generally charge high customs or import duties or change travelers departure taxes when leaving the countries.
Is Saudi Arabia tax free country?
There is no income tax or capital gains tax on individuals in Saudi Arabia.
Is Hong Kong tax free country?
The World Bank ranked Hong Kong as the country with the second most friendly tax system in 2020.
DON’T WANT TO PAY INCOME TAXES?
If you would like help setting up a life in Asia or other parts of the world in countries that don’t have taxes, feel free to reach out to our team.
We offer various strategies we offer our clients to help them legally lower their taxes.
We help people design bespoke, holistic offshore strategies every day that do just that.