As the deadline for tax filing grows closer and closer, plenty of Americans are preparing their returns and shaking their heads at just how much they owe in taxes.
However, if you think America’s tax rates are ridiculously high, you might be surprised to learn that by certain measures, the U.S. actually has among the lowest taxes in the world.
GOBankingRates compiled a list of the best and worst countries for taxes so that you can see where you compare. The countries on this list were ranked solely based on tax revenue as a percentage of gross domestic product, as reported by the World Bank. Note that certain countries were excluded from the list, such as those from war-torn areas, those with a minimal population — which skew results — or those with data older than 2016.
Click through to see the best and worst countries for taxes, starting with the least tax-friendly countries.
Last updated: Jan. 16, 2020
10 Least Tax-Friendly Countries
America’s top tax rate of 37% might seem high, but when it comes to tax revenue as a percentage of a country’s GDP, there are plenty of other countries with a higher tax burden than the United States.
The land of ancient philosophers, the birthplace of democracy, the home of the Parthenon and the fabled Greek Islands — to many, Greece seems like paradise. Some residents may disagree, however, as tax rates are high. In spite of the tourist dollars pouring into the country, Greece still tags its citizens with a whopping 45% top personal tax rate. Corporate tax rates are a bit better, peaking at 28%. All taxes combined make up 26.2% of Greece’s total GDP.
Jamaica is a paradise for some, but not necessarily for its residents — at least when it comes to taxes. The home of reggae, beautiful beaches and an amazing culture nets 26.2% of its GDP from taxes. Rather than relying solely on tourist revenue, Jamaica’s corporate tax rates top out at 33.3%, while personal rates hit 30%.
8. Trinidad and Tobago
Trinidad and Tobago is a two-island country off the coast of Venezuela. The nation is one of the most prosperous in the Caribbean, thanks to its vast petroleum and natural gas industries. Tourism is also being cultivated. In addition to these economic contributions, Trinidad and Tobago also generates 26.5% of its GDP from taxes. Corporate tax rates reach as high as 50%, but only for some petroleum production companies, while the top personal tax rate hits 30%.
7. South Africa
South Africa isn’t often mentioned as one of the most tax-unfriendly nations in the world, but perhaps it’s being overlooked. Located at the very bottom of Africa’s continent, this country known for its safaris, minerals and beautiful landscapes taxes its citizens 45% on the high end, with corporations paying a flat 28% tax, regardless of industry. Overall, taxes contribute 27% to South Africa’s GDP.
Namibia is another African nation that has a host of natural attractions but doesn’t fare as well when it comes to its national tax situation. Namibians contribute 27.1% to the country’s GDP in the form of taxes, in part due to the 37% personal income tax. Corporate taxes reach as high as 55% for diamond-mining companies, with oil and gas corporations paying at least 35%. As Namibia is one of the most sparsely populated countries on Earth, each individual and corporate taxpayer plays a big role in sustaining the country’s tax revenues.
Like its fellow Scandinavian country Denmark, Sweden has a society built on high social taxes and extensive government benefits. Although most Swedes are happy with this arrangement, these benefits do come at a cost. Sweden’s top personal tax rate of 57.1% and its corporate tax rate of 21.4% help push the country into the upper echelon when it comes to global tax rates. Overall, World Bank data indicates that taxes comprise 27.6% of GDP in Sweden — one of the highest rates in the world.
4. New Zealand
New Zealand is one of the most beautiful and progressive countries on the planet. The nation was the first self-governing nation in which women could vote, and it’s the only nation in the world to view all major government decisions through the lens of climate change. The country is also a land of champions. The New Zealand All Blacks are the most successful international men’s rugby team in the world, with a winning percentage of nearly 80%. The country is also the homeland of one of the two men who first climbed Mount Everest: Sir Edmund Hillary. Tax-wise, the country has a top personal rate of 33% and a corporate rate of 28%.
Macao is a dynamic city-state with a fascinating history and modern towers of gold. This former Portuguese colony was turned over to mainland China in 1999 and has since experienced an incredible boom in casinos and resorts. Many Americans consider Las Vegas to be the gambling capital of the world, but in terms of revenue, Vegas can’t hold a candle to Macao. The country generates over $13 billion annually in gaming revenue, making it the largest casino gambling jurisdiction in the world. In 2018, combined Strip and Downtown revenues in Las Vegas barely topped $7 billion. Taxes on corporate income only reach 12%, which is the same as the top personal income tax rate.
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Lesotho is a landlocked African country that flies under the radar of many tourists, even though it’s surrounded by perennial tourist heavyweight South Africa. Perhaps because it lacks a significant influx of tourist dollars, Lesotho is one of the most highly taxed countries on Earth. According to World Bank data, taxes comprise 29.1% of the country’s GDP, third-highest on the list. Personal tax rates reach 30%, while corporations can pay as much as 25%.
Denmark, along with its Scandinavian brethren, has the reputation of being a high-tax region, thanks in no small part to its social programs. In this case, the reputation proves accurate. In addition to beautiful landscapes, fascinating history and happy society, there’s no denying that Denmark has high taxes. In fact, according to the World Bank data, Denmark’s taxes contribute the highest percentage to GDP of any country, at 33.4%. Personal tax rates peak at a whopping 55.8%, while top corporate rates are 22%.
10 Most Tax-Friendly Countries
It may be hard to believe for American taxpayers, but the U.S. lands on the list of most tax-friendly countries. According to data from the World Bank, the U.S. is actually one of the nations paying the smallest proportion of its GDP in taxes. Here’s a look at America’s colleagues on the list of countries with the lowest taxes when analyzed as a percentage of GDP.
Germany might have a relatively heavy tax burden on top earners, but that certainly doesn’t appear to be hindering its economy too severely as it has the fourth-highest GDP in the world. This giant GDP helps offset the high tax rates felt by individual taxpayers in the country, who pay a rate as high as 45%. Corporations don’t escape this taxation either, paying nearly 30%. The size of the country’s economic output brings the percentage of tax revenues down to 11.5% of GDP.
The fact that Russia fosters a tax environment that’s relatively friendly to top earners might be reflected in the fact that CNBC recognizes Moscow as the city with the fourth-most billionaires living in it. Individual tax rates hover at a minuscule 13%, among the lowest in the world for countries that have a personal income tax. Corporate rates top out at just 20%. Combined with the country’s large economic output, the net result is that taxes don’t comprise a major portion of Russian GDP.
India is one of the most populous countries on Earth, full of history, tradition, architecture and wonder. It also has one of the lowest tax rates as a percentage of GDP, at 11.2%. Corporate tax rates top out at 30%, and personal tax rates reach 35.8%, so tax rates overall are not low. However, the country’s huge economic output helps put a damper on the amount that taxes contribute to GDP.
Argentina has a top personal income tax rate of 35% and a top corporate tax rate of 30%. Taxes as a percentage of GDP, however, sit at a low 11%. Argentina has one of the biggest economies in Latin America, relying on vast energy and agriculture resources as primary contributors. However, the economy is currently struggling to pull out of crisis mode. Inflation is currently around 50%, and the country’s currency has lost two-thirds of its value since 2018.
The mere name of Switzerland likely conjures up many images in the minds of most Americans, such as chocolate, the Alps, neutrality and bank accounts. And, as far as its reputation as being a tax haven, the rumors aren’t too far from the truth. Yes, individual income tax rates can go as high as 40%. However, corporate tax rates max out at just 18%. As a percentage of GDP, tax revenue in Switzerland only reaches 10.1%.
5. The United States of America
Would you believe that the good ol’ United States of America is one of the least-taxed countries in the world when it comes to tax revenue as a percentage of GDP? Perhaps this is a little misleading, as the U.S. is by far the largest economy in the world in terms of GDP. The passage of the Tax Cuts and Jobs Act in 2017, however, has also contributed to a lower American tax rate. The top bracket now reaches 37% for individuals, while the corporate tax rate peaks at 27%.
China has the second-largest economy in the world, in terms of GDP, and this size helps minimize the effect that taxes have on the country’s ranking for purposes of this survey. Overall, taxes comprise just 9.2% to GDP for China — one of the few major countries in the world to have a rate below 10%. For wealthy earners in China, however, taxes still take quite a bite. The top personal income tax rate sits at 45%. Corporations fare a little better, with a top rate of 25%.
Ethiopia has a 35% top personal income tax rate, but overall tax revenues comprise just 7.5% of GDP. Corporate tax rates top out at 30%. Although Ethiopia is regularly mentioned as one of the world’s most impoverished nations — which it still remains — the country has some of the highest income equality in the world, comparable with that of Scandinavian countries. The Ethiopian economy has also been growing sharply for years. The state is actively engaged in Ethiopia’s economy, pumping money into it via infrastructure and other projects.
2. Saudi Arabia
Saudi Arabia is one of many Gulf States with low tax rates, large GDPs and a correspondingly small overall tax burden as a percentage of GDP. The country’s total tax burden relative to its GDP is just 3.4%. The prime reason for this low figure is that Saudi Arabia has no personal income tax. Saudi Arabian corporations also pay no tax. Foreign corporations are taxed, with most facing a rate of 20%. However, those engaged in oil and hydrocarbon production can pay rates of up to 85%.
1. United Arab Emirates
The United Arab Emirates is at the top of this list for one good reason: The country enforces neither a personal nor a corporate income tax. This is due in no small part to the immense oil and gas revenues generated by the country. The country did enact a 5% value-added tax in 2018 for the first time, which generated Dh 27 billion, equivalent to about $7.3 billion USD. Overall, tax revenues accounted for just 0.1% of the UAE economy.
Countries With Lowest Taxes
Like all statistics, the results can vary based on how you interpret them. Some of the countries on this list, like the United Arab Emirates, have low taxes across the board, with neither personal nor income taxes. Others may have high individual tax rates but still have low tax revenues as a percentage of their GDP, in part due to the size of their economies. While Americans paying the top 37% tax rate may find it high, it’s not near the highest rate in the world, and rates on lower-earning taxpayers are significantly lower. However you slice it, the bottom line is that many more countries in the world are more tax-unfriendly than the United States.
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Joel Anderson contributed to the reporting for this article.
About the Author
After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.