How to choose a country where the tax system works in your favor? This is a key question for entrepreneurs expanding into international markets. Tax rates, incentives, and administrative burdens directly impact the profitability and long-term success of a business. For example, the average corporate tax rate worldwide is 23%, but in some countries, it can rise to 50% or drop to 0%.
Moreover, international tax planning has become increasingly complex due to globalization, new regulations, and changes in tax treaties. Governments compete for investment and offer attractive tax conditions, but the reality is often more complicated. Countries with low tax rates may have high requirements for economic presence or reporting. At the same time, jurisdictions with simple company registration and accounting rules might have higher mandatory payments.
Why is the tax system important when choosing a country for business?
Many entrepreneurs are interested in which country has the lowest taxes. This is understandable since high tax rates can significantly reduce business profitability. However, low tax rates or even tax exemptions should not be the only deciding factor. You should also consider the standard of living in the chosen country – a country with weak consumer purchasing power may limit business growth opportunities.
In addition, if a company operates in multiple countries, it may be required to pay taxes on the same income in different jurisdictions. Double taxation avoidance agreements help mitigate this issue. Before choosing a country, it is important to check whether it has signed a DTA with your home country.
Tax incentives play an equally important role. Many countries offer special conditions for startups, exporters, or businesses investing in innovation. These programs reduce tax burdens and enhance business competitiveness.
The ideal tax system is a balance between low rates, tax incentives, and minimal risks. The best countries for doing business are those that provide easy market access, low taxes, and favorable conditions for foreign investors.
Where is it easiest to do business?
Currently, Oman and Bahrain lead in ease of doing business, offering some of the lowest taxes in the world. The UAE is also attractive due to its zero income tax, high standard of living, safety, and economic stability. However, due to high competition, the UAE is somewhat less favorable compared to Oman and Bahrain.
In Europe, several countries also offer favorable tax environments. Ireland is particularly attractive for corporations, especially in the tech sector. Switzerland is known for its low rates and stable economy, while Cyprus offers attractive conditions for foreign investors.
Comparing tax systems in different countries helps to understand where it’s most advantageous place to start or register a business, not only considering tax rates but also additional factors. Below, let’s take a closer look at each country.
Oman
Oman is one of the most attractive countries for running a business. Corporate tax rates range from 3% to 15%, and in Free Zones, they can be reduced to 0%, significantly reducing the financial burden for businessmen. Foreign companies benefit from tax incentives and a simplified registration, process, with reduced bureaucracy. Oman is actively developing Free Economic Zones and offers additional benefits for international businesses. Competition remains relatively low, as Oman has only recently opened up opportunities for foreign investment.
Bahrain
One of Bahrain’s main advantages is its strategic location in the Persian Gulf, which provides fast access to major regional markets. The country is also a hub for financial services and startup infrastructure. Special Economic Zones offer simplified registration and business-friendly policies. Bahrain offers zero income tax and only 5% VAT, which attracts international companies. The only exception is the oil and gas sector, which is subject to a 46% tax rate.
UAE
The UAE is a unique jurisdiction with zero corporate tax in most industries. Upon reaching $102,000 per year, a business will need to pay corporate tax at a rate of only 9% and VAT at 5%. Companies in Free Economic Zones benefit from special exemptions, including 100% foreign ownership. The country is famous for its high level of digitalization and simplicity of tax administration, which makes it especially attractive for tech businesses.
Cyprus
Cyprus offers one of the lowest corporate tax rates in the EU — just 12.5%. At the same time, IT companies and research-focused businesses can reduce their tax rate to 2.5%. Therefore, the country is especially attractive for technology startups. Tax incentive programs for new businesses and a simple registration procedure make Cyprus an ideal starting point for entering European markets.
Ireland
Ireland is well known for its low corporate tax rate of just 12.5%, particularly for retail businesses. It is one of the most favorable jurisdictions in Europe, which makes it attractive for international corporations. Income taxes here are among the lowest in the EU, and the country’s legal framework encourages the establishment of offices and IT companies. Ireland also provides tax credits for research projects and new enterprises.
Switzerland
Switzerland attracts investors with its stable economy and progressive tax system. Corporate tax rates range from 11.9% to 25%, depending on the canton (territorial unit). The country offers tax incentives for R&D and simplified conditions for holding companies. The country’s financial system ensures a high level of confidentiality and security, which makes it an ideal environment for banks and large corporations.
Which country is the best choice?
Many entrepreneurs begin their search for the best option by asking the question, which country has no taxes. However, completely tax-free jurisdictions are rare, and such conditions are often associated with high VAT rates, corporate taxes, or other mandatory fees. Beyond tax rates, several key factors should be considered:
- Bureaucracy level. Some countries offer simplified business registration and administration procedures.
- Infrastructure. The availability of developed transportation and digital networks matters.
- Political stability. This is a crucial factor for long-term investments.
- Market access. Geographical location and trade agreements play a significant role.
- Local laws and business culture. Regulations, licensing requirements, and operational frameworks may vary.
To make the decision easier, here’s a comparative table of different countries based on tax burden and key business conditions:
| COUNTRY | CORPORATE TAX | VAT | KEY FEATURES | BENEFITS FOR FOREIGN INVESTORS |
|---|---|---|---|---|
| Oman | 0-15% | 5% | Simple administration, no corporate tax, low bureaucracy, developing infrastructure, high political stability. | Special privileges in Free Zones |
| Bahrain | 0% | 10% | Access to the Gulf markets, no income tax, low bureaucracy, stable economy, developed infrastructure. | Simplified procedures |
| UAE | 0-9% | 5% | Highly digitalized economy, no corporate tax, modern infrastructure, political stability, flexible licensing. | Full business ownership |
| Cyprus | 2,5-12,5% | 19% | Developed infrastructure, EU market access, favorable tax policies in the EU, IP-Box regime for IT sectors. | Tax benefits for startups |
| Ireland | 12,5% | 23% | High stability, low income tax, minimal bureaucracy, developed financial sector. | Benefits for research |
| Switzerland | 11,9–25% | 7,7% | Ease of registration, low income tax, transparent laws, developed infrastructure. | Tax incentives for R&D projects |
How to simplify the choice of country for business relocation
Let’s summarize. We have reviewed the best countries for doing business and determined that when choosing a country, it is necessary to take into account many other factors: legislation, economic stability, regulatory barriers, and special incentives, etc. After all, taxes are just one of the selection criteria, albeit a very important one. Even after reviewing tax rankings, it is crucial to seek expert advice: the professionals at Dynasty Business Adviser, with deep expertise in international regulations, can help you select the best jurisdiction based on your business goals, identify hidden costs that could impact profitability and anticipate potential risks associated with relocation.
We offer a full range of legal and financial services, from company registration to business support and tax planning. The advantages of working with us:
- As a licensed agent, we guarantee full compliance with legal standards in all our services.
- With over 10 years of successful experience, we can handle even the most complex cases efficiently.
- We offer turnkey solutions and organize processes so that you can focus on growing your business.
- We offer personalized consultations, analyze exciting issues, and develop a personalized strategy.
By partnering with us, you gain a trusted advisor who will not only help you determine where to register your business abroad but also navigate all challenges of international business setup and operations.
