Want to start a business in a country with a low corporate tax rate?
If you want to live there, you should be sure that you are choosing a country that also offers a high quality of life – be it through high quality schools, excellent health care, wonderful public facilities or something as simple as a breathtaking backdrop.
Even if you plan to visit only occasionally, you may want to choose a safe country with good health care and facilities.
Let’s take a look at some of the best low corporate tax countries to live in.
Guernsey (0% corporate tax)
Guernsey has an incredible 0% corporate tax rate for most businesses, although there is also a higher 10% rate that applies to certain types of businesses (like banks) and a 20% rate that applies to others, including cannabis companies .
As a channel island between Great Britain and France, Guernsey has breathtaking scenery and coastline. It is an independent, self-governing country with a large financial industry as well as a large creative and digital industry. You can automatically live and / or start a business in Guernsey if you are a UK citizen and others can get visas.
Most of the people in Guernsey speak English (the official language), although French is used for administration. Some residents speak Guernésiais, a Norman dialect.
Barbados (5.5% corporate tax)
With a corporate tax rate of just 5.5% (and only 1% if your company makes over $ 30 million), Barbados is definitely business friendly. There is a decent health system, a large ex-pat community, and of course all the sun, sand, and recreational opportunities one could want.
The main downside is that Barbados can be very expensive. Imported brands are expensive and, unless your business makes a lot of money, you may need to adjust your lifestyle accordingly.
Hungary (9% corporate tax)
Hungary’s corporate tax rate of 9% is the lowest in the EU. There is also a low income tax rate of 15%. Hungary has a well-developed urban transport system and strong preschool and elementary education. (There are also a number of international schools in the capital, Budapest.) Hungary has a vibrant cultural scene and a fascinating history.
VAT is high (27%) so products can be expensive. However, most medications and some foods have a lower rate of 5%. Compared to other European cities, Budapest has a low cost of living.
Gibraltar (10% corporate tax)
Gibraltar is a British territory off the south coast of Spain. It has an incredibly strong economy and is one of the most prosperous countries in the world. If you are a UK citizen, you can move to Gibraltar without a permit.
Gibraltar’s main language is English, although there is also the local dialect Llanito, a local form of Spanish with elements of English and other languages. It’s a small, densely populated island. So if you are looking for lots of space to roam, this may not be the choice for you.
Cyprus (12.5% corporate tax)
In addition to having a low corporate tax rate, Cyprus is a cheap place to buy property – and it’s easy for foreigners to do so too. The average price for a house on the Greek Cypriot side of the island is around $ 110,000 (plus stamp duty).
If you love the sun, you will be very happy in Cyprus with almost 340 sunny days a year. The summer months (April to October) are very hot and dry, so be sure to wear sunscreen.
Ireland (12.5% corporate tax – likely to rise to 15% as part of G7 reforms)
Ireland ranks second in the world for quality of life, which makes it a fantastic choice if you are looking for a country with low corporate taxes. It has a very strong educational system, although it should be noted that the vast majority of schools are Catholic, with a relatively small but growing number of multi-denominational schools.
Ireland has a temperate climate with mild, humid and changeable weather – and typically warm summers and mild winters. It is a popular and safe country with many coastlines and beautiful lakes and landscapes.
Canada (15% corporate tax)
Canada was ranked the best country in the world for its political stability, good job market and strong public education system. It’s also considered impressively business-friendly, due to friendly tax laws, as well as low bureaucracy and corruption.
Canada is a large country with almost all Canadians living in the south where the weather is warmer. If you are planning to move to Canada, keep in mind that winter can be extremely cold in some areas – so choose carefully. Of course, if you love skiing, Canada is a fantastic place to live, with a large number of world-class ski resorts.
Can you conduct your overseas business from your home country … and should you?
Some entrepreneurs choose to have tax residence in a country without being resident there themselves. This is certainly possible, although you will likely need a physical address for your business within the country so that someone can get legal documents related to your business.
However, starting a business in another country to avoid taxes in your home country is viewed as unethical by some – especially if you have amassed a large amount of wealth. As this AIS-CPA author said of the Paradise Papers leak:
“By not paying taxes, they are withdrawing huge sums of money from the governments of their countries that are designed to run the systems that enabled them to achieve their incredible wealth and prestige in the first place.”
Ultimately, if you really want to run a business in a country with low corporate taxes, you may find that the easiest (and most ethical) way for you to live there yourself. All of the above countries have excellent quality of life, so why not give it a try?
This column does not necessarily represent the opinion of the Bureau of National Affairs, Inc. or its owners.
Information about the author
Kenneth W. Boyd is the co-founder and chief educator of Accountinged.com, an online education provider for established finance and accounting professionals. He also runs the Accounting Accidentally blog, a one-stop shop for insights into all accounting matters.
Bloomberg Tax Insights articles are written by seasoned practitioners, academics and policy experts who discuss developments and current issues in the tax field. To make a contribution, please contact us at TaxInsights@bloombergindustry.com.