Corporate income tax rates vary from country to country. However, the average tax rate worldwide is around 23.64%. The highest corporate tax rate is 50% in the tiny African nation of the Union of the Comoros.
Thankfully, countries like the Comoros are outliers and on the other end of the spectrum you can find countries with a general corporate income tax as low as 0%. So let’s take a closer look at the Countries with the Lowest Corporate Tax Rates in 2023.
Nobody likes paying high taxes, but getting the right advice is critical. At Nomad Capitalist we’ve advised thousands of entrepreneurs and investors on fully-compliant and legal tax reduction strategies, resulting in over $1 billion in total client savings. Talk to us about creating a holistic, custom-created Action Plan today.
Corporate Income Tax Rates
Corporate income tax rates refer to a percentage rate of tax placed on businesses. These rates vary depending on where your business is located and the amount of income. However, there is a lot of talk about the possibility of a 15% global minimum tax that is trying to roll out.
Check out our video How the USA’s New 15% Minimum Corporate Tax Law Works for a deeper understanding.
Low corporate tax countries attract entrepreneurs and foreign investors looking to take advantage of favorable tax policies. These countries are generally more business-friendly overall.
0% Corporate Taxes Countries
The Bailiwick of Jersey
Considered a British Overseas Territory, The Bailiwick of Jersey is a self-governing island off the coast of Normandy, France. It is one of the Channel Islands and contains Jersey and several smaller islands.
Jersey has a 0% corporate tax rate. However, for some institutions, like property development firms and large retailers, higher rates can apply. Jersey’s economy focused heavily on the financial sector, with banking, trust, and investment services being the main contributors to GDP.
The Cayman Islands
The Cayman Islands offers the advantage of a 0% corporate tax rate. The Cayman Islands also doesn’t tax income, dividends, or capital gains. However, companies operating in this tiny Caribbean nation pay a licensing fee to the state rather than corporate taxes.
Tokelau Islands
Unless you are from Oceania, you may be forgiven for not knowing much about the Tokelau Islands.
Tokelau is a territory of New Zealand located in the South Pacific Ocean and includes three coral atolls, Atafu, Nukunonu, and Fakaofo, with a tiny population of 1,500 people. This small nation has zero corporate tax.
Despite the challenge of being particularly vulnerable to the effects of climate change, Tokelau has been working towards improving its economic situation through sustainable tourism and renewable energy projects.
Low Corporate Tax Rates in 2023
Barbados
Barbados sits in the Lesser Antilles of the Caribbean Sea and is known for its beaches, crystal clear waters, and having one of the lowest corporate tax rates in the world. It levies just 1% for income over BBD$30 million, while a corporate tax of 5.5% is applicable for income of $1 million or less.
Barbados has a mixed economy based on tourism, manufacturing, and agriculture. The service sector accounts for the largest share of the economy, representing approximately 80% of GDP. Visitors mainly come from the United States, Canada, and the United Kingdom.
The United Arab Emirates (UAE)
The UAE is located in the southeastern part of the Arabian Peninsula and has seven emirates, each with a distinct identity. The UAE is known for its thriving economy and, until recently had a corporate tax rate of 0%. Then, in 2022, the UAE announced that a new Corporate Tax Law was coming into effect as of June 2023.
The effect was to set a new 9% corporate tax to profits above AED 375,000.
The UAE has greatly diversified its economy and has become a global tourism, financial services, and trade hub. The Arab nation is also home to a diverse expat population, with people from all over the world living and working in the UAE.
Montenegro
The beautiful nation located in Southeast Europe, Montenegro, has a progressive corporate income tax.
Depending on profit, it varies from 9% to 15%. On profits up to €100,000, tax is 9%. On profits between €100,000 to €1,500,000, a corporate tax of €9,000 plus 12% is payable, and above €1,500,000, a tax of €177,000 plus 15%. Although not a eurozone or EU member and does not have a formal agreement with the EU, Montenegro adopted the euro as its de facto currency.
Montenegro is an attractive spot for affordable luxury living in Europe with beautiful beaches, making it ideal for retirement properties and property investments in general. Montenegro is a destination for those looking for a new home.
Entrepreneurs and investors have been quick to see the potential of getting in early while the country is still an EU candidate. Joining the European Union is one of Montenegros’ primary objectives, and it is predicted to be a member sometime between 2025 to 2030.
Hungary
A Central European nation, Hungary has a population of around 9.7 million. Hungary has one of the best corporate tax rates in the EU, with a flat rate of 9%.
In recent years, Hungary has seen economic growth and development, specifically in the fields of car manufacturing, food processing, and electronics. The country is a member of the European Union and NATO and is known for its strong cultural identity and traditions.
Andorra
The Principality of Andorra is a small, landlocked country located between France and Spain, with a population of approximately 77,000 people. Although it is part of the eurozone, it is not part of the European Union. Even so, it enjoys a special relationship with the EU and, like Montenegro, uses the euro as its official currency.
Andorra is known for its stunning mountain views, ski resorts, and the incredibly low tax rate of 10%. As of January 2023, companies now pay an “object tax” on profits at a minimum of 3%. However, the low corporate tax rate of 10% remains one of the lowest in Europe. You can reduce the 10% corporate income tax even further on corporation tax on profits for business income derived from outside Andorra.
The special tax regime of Andorra requires government permission, which we can help you navigate as a Nomad Capitalist client.
Andorra’s economy is mainly based on tourism and banking, as the country has low tax rates and strict banking secrecy laws. In recent years, Andorra has made efforts to diversify its economy by investing in technology and renewable energy.
Bulgaria
Bulgaria is a country situated in southeastern Europe bordered by Romania, Serbia, North Macedonia, Greece, and Turkey. With a population of over 7 million, Bulgaria is one of the less-populated countries in the European Union.
A flat corporate income tax rate of 10% is generally applied in Bulgaria. Local companies are taxed on worldwide revenue, and nonresident companies are taxed only on income generated within Bulgaria.
Foreign investment has played an important role in driving the growth of the Bulgarian economy. Bulgaria has become an attractive destination for investment due to its strategic location and skilled workforce. Major investors in Bulgaria include companies from Austria, Germany, the Netherlands, and the United States.
North Macedonia
While it’s had a bumpy ride in terms of nomenclature, North Macedonia, or to use its official name of, the Republic of North Macedonia, is another potential EU candidate from the former Yugoslavia offering low corporate tax rates.
North Macedonia’s corporate tax rate is just 10%. Both resident and nonresident companies can benefit from the simplified tax regime based on overall annual income.
North Macedonia has a small population of around 2 million people. The country’s economy is focused on the service and industrial sectors. North Macedonia has been working towards integration into the European Union, which would mean significant economic benefits.
Overall, North Macedonia’s economy has excellent growth potential, but it is still developing and will require continuous efforts to overcome its challenges and achieve sustainable growth.
Gibraltar
Known locally as “The Rock”, and to expats as “Gib”, Gibraltar is a tiny 2.58 square miles (6.7 kilometers) region located at the southern tip of the Iberian Peninsula, bordering Spain.
In 2021, Gibraltar changed its statutory corporate income tax rates from 10% to 12.5%.
The corporate tax rates are payable on income made in or that comes from Gibraltar. Basically, if the majority of the income-generating activity takes place in Gibraltar, it will be subject to corporation tax.
Gibraltar offers one of the lowest tax rates for companies with activities outside the owner’s country of origin, such as marketing, research, software development, website maintenance, administration, etc. Even traditional companies physically based in Gibraltar can benefit by paying a 10% corporation tax on profits from within the country.
Gibraltar is home to a thriving financial services and banking sector with various banks, investment firms, and insurance companies, as well as many of the UK’s leading online gambling companies, benefiting from the attractive low tax regime.
Despite exiting the EU alongside Britain in 2020, Gibraltar maintains close legislative harmony with EU directives.
Gibraltar’s diversified economy means that, despite the challenges surrounding Brexit, Gibraltar continues to attract investment and offer opportunities for growth and prosperity. It’s also of particular interest to those looking for a European base of operations which also offers easier access to the UK market.
Liechtenstein
Another popular low-tax jurisdiction, Liechtenstein, is a small, landlocked principality, in central Europe, between Austria and Switzerland.
Despite its tiny size of 61.7 square miles (160 square kilometers), Liechtenstein has a very strong economy driven by its thriving financial services sector.
Liechtenstein has a flat rate of 12.5% corporate tax. It is predicted to remain the same as it already aligns with the proposed new world standard.
Liechtenstein has a population of just 38,000 and offers a range of tourist activities, including skiing, hiking, and mountain biking. This central European nation is also known for offering a high quality of life, low crime rates, and excellent healthcare.
Cyprus
The Republic of Cyprus is an island in the eastern Mediterranean Sea, with a population of 1.2 million. It is one of the biggest islands in the Mediterranean and is close to Turkey, Greece, and Egypt. Tourism, financial services, oil exports, agriculture, and shipping dominate the country’s economy.
With a flat corporate tax rate of 12.5, Cyprus has one of the lowest rates in the EU. However, nonresident companies are also taxed on profit from sources within Cyprus.
Cyprus’ economy is set to be one of the best performing this year, with a predicted growth rate of 1.6%. FinTech, entrepreneurship, and innovation are all big drivers of the Cyprus economy, and betting and online gambling companies, in particular, continue to benefit from increased revenue.
Ireland
Ireland has the advantage over Cyprus for entrepreneurs, with a stronger economy and numerous foreign companies flocking to the small island. Tech companies, in particular, choose to go to Ireland for a combination of reasons, one being Ireland’s favorable tax climate.
Other advantages of Ireland include the fact that it’s an English-speaking country and easily accessible.
As an EU member state, Ireland is also in the unique position of having easier access to the UK market, making it one of the world’s most exciting economic zones.
Companies such as Apple and Google have taken advantage of the significant tax breaks and investment incentives to companies that Ireland offers. On top of this, Ireland offers a highly skilled and educated workforce, with one of the world’s highest numbers of science and engineering graduates per capita.
The Irish government has been proactive in creating policies encouraging economic growth and entrepreneurship, making it a supportive environment for businesses of all sizes. Ireland’s strong international connections and position in the European Union make it an ideal location for companies looking to expand into global markets.
Conclusion
As we have seen, corporate tax rates can vary wildly from one country to the next. Some are extremely high, others quite low while some countries have no corporate tax at all.
Knowing which option is best for your needs involves firstly understanding the motivation behind each country’s approach to corporate taxes and whether or not they tax locally-sourced income.
Some countries are small and lack resources, so they drop their rates to attract business while others, like the UAE, are so wealthy they need not levy tax at all and only do so at the behest of foreign governments.
In the end it comes down to a trade off. Each country has a different niche market it is trying to best cater for, which gives you plenty of choices, but only if you have the time to shop around.
So if you are an entrepreneur looking to reduce taxes and move your operations overseas, save yourself the time and spare yourself the prospect of running into hassles further down the line, get in touch with our team of experts and we’ll create your total offshore package as part of a holistic Action Plan.
Low Corporate Tax Countries FAQ
Corporate tax rates are taxes applied to the profits corporations or businesses earn. Income generated from business activities such as sales, goods, services, or other revenue-generating activities is generally subject to corporate income tax. The corporate tax rates are typically calculated as a percentage amount.
Corporate taxes vary from country to country, with some countries imposing lower rates than others. Corporate taxes generate revenues for governments at the federal, state, or local levels.
Noncompliance with corporate tax laws can result in significant penalties, fines, or legal action. Therefore, companies must ensure that they comply with all regulations and reporting requirements to avoid damages.
Corporate tax rates vary significantly around the world. Some countries have high corporate tax rates to generate government tax revenue. Some of the countries with the highest corporate tax rates include:
Comoros – corporate tax rate of 50%.
Puerto Rico – corporate tax rate of 37.5%.
Brazil – corporate tax rate of 34%.
Argentina – has a corporate tax rate of 35%.
Venezuela – has a corporate tax rate of 34%.
American Samoa – corporate tax rates of 34%.
It’s important to mention that some of these countries with the highest corporate tax rate may offer tax rate breaks or incentives for specific industries or types of businesses. Also, corporate tax rates can change over time as national governments may look to adjust policies.
As always getting the right advice from the start can save you lots of time, effort and money and, rather than always relying on local providers, it pays to have impartial advice from international experts with no specific allegiance to any one jurisdiction.
That’s just one of the reasons people choose Nomad Capitalist, because we have direct experience across multiple jurisdictions and will help you weigh up the pros and cons of each. That way you’re assured that you get the best outcome based on your exact needs.
We have helped thousands of entrepreneurs and investors with legal tax reduction strategies, company formation and offshore investment. Remove all the guesswork, skip past the gatekeepers and speed up the entire process with a Nomad Capitalist Action Plan.
