The Top 7 Countries With the Best Tax Rates
Many people complain about taxes in the United States. The 37% tax rate on higher-income Americans can seem unfair, but it is not without merit. Still, how does the U.S. stack up against other countries? Is the federal government worse than or better than other territories?
When examining the tax systems of other countries, seven systems are better than the rest. The following examination reviews taxes as a part of the GDP and individual tax rates.
1. United Arab Emirates
The United Arab Emirates is hands down the best country for taxes for businesses and people. The government does not enforce a corporate or personal income tax.
Oil and gas production ensures the country makes sufficient revenues to thrive. Still, in 2018, the government enacted a 5% value-added tax, generating $7.3 billion. However, even with the new tax, taxes only account for 0.96% of the GDP.
Formerly Burma, Myanmar presents an impressive history and continuing struggle. In 2015, the country held its first free election.
Still struggling to move away from its authoritarian past, Myanmar favors low taxes. Yet, the country does have one of the highest personal tax rates at 25%. Still, with the social security tax at 2% and the percentage of the GDP at under 6%, Myanmar is an evolving and tax-friendly economy.
As one of the most impoverished nations, Ethiopia is not an ideal tax haven. Still, the country is making tremendous strides in income equality and poverty reduction. In 16 years, from 2000 to 2016, the nation cut its poverty rate almost in half to 24%.
While the top individual tax rate is high at 35%, taxes make up only 6.6% of the GDP. As the state continues to finance vital infrastructure, Ethiopia's future is looking up.
Tax-friendliness can refer to individual taxes and the GDP. Individual tax rates in Argentina can reach 35%, and indirect taxes stands at 21%. Both numbers seem high and potentially unfair. Still, as a percentage of the GDP, Argentina carries a low 8.04%.
5. Saudi Arabia
People often place Saudi Arabia on the list of the wealthiest countries in the world because of its oil production, which it is. Still, many people do not realize it is also one of the friendliest countries on taxes.
Saudia Arabia imposes no personal income tax. However, the country does impose a 10% social security tax and a 15% indirect tax. Additionally, the nation created a value-added tax in 2018 of 5%, which rose to 15% in 2020. Yet, taxes only make up 8.93% of the GDP.
6. Equatorial Guinea
A former Spanish colony, Equatorial Guinea rests in sub-Saharan Africa. Its land is rich in minerals and other commodities, including gold, diamonds, uranium, and oil. Additionally, the land is arable and farmable.
Because of the wealth of the land and the economy's growth, citizens receive the benefits of lower taxes. Tax revenue makes up only 9.59% of the GDP.
7. The United States of America
Surprise! Despite frequent complaints and debates, the United States is a tax-friendly country. True, the top tax bracket is 37% for individuals, but as a percentage of the GDP, taxes make up only 10.02%.
Most people do not like paying taxes. Paying tax can feel like spending money without a purpose, but the money serves a purpose. Taxes go towards upholding infrastructure. While it is not a price you pay in every country, it is not always as bad as it seems.