What countries have the best corporate tax rates?

| Jan 29, 2021 | Tax Law |

Business has become global. With the exception of a few countries that don’t allow outside corporations or investors, most of the globe welcomes new business and investment. As a United States citizen, whether you live abroad or not, starting a business in another country could be a lucrative source of income.

However, there will definitely be tax considerations. How much you have to pay the government to operate a business can directly correlate to how profitable your business operations are. For some people, the best business opportunities might involve companies in countries with very low business tax rates. What are the best countries in terms of taxation for corporations operating there? 

Some countries are eager for business investment

There are currently 10 different countries that do not charge any corporate taxes. The goal of such policy is often to encourage growth and investment. The countries with these attractive 0% tax rates include:

  • Bermuda
  • Anguilla
  • Vanuatu
  • Guernsey
  • Bahrain
  • Cayman Islands
  • Isle of Man
  • Turks and Caicos Islands
  • Jersey
  • Bahamas

However, it’s important to recognize that if you start a business abroad as a U.S. citizen, there will likely be domestic tax implications as well.

Plenty of other companies have attractive tax policies

While a 0% corporate tax rate is attractive, there are certainly other countries with low corporate tax rates that have other incentives worth considering. Hungary, Ireland and many other countries offer low tax rates. Other countries, like the United Arab Emirates, have staggeringly high corporate tax rates.

Tax rates alone aren’t all that matter. The costs of transporting people or supplies, the infrastructure available and possible incentive programs can all factor into how lucrative or expensive a specific location is for businesses. Simply choosing a location for its low tax rate isn’t the best approach, especially since the domestic taxes where you operate will not be the only tax laws that apply to your company and its income.

International taxes often require a review of the tax treaty in effect between the United States and the other country. As mentioned above, it is crucial for business owners or potential new entrepreneurs looking to invest abroad to understand not only their international tax obligations but also their domestic tax responsibilities when starting an international business.