It’s a guide to jurisdictions where residents pay no personal income tax on salaries as of 2025. These include parts of the Gulf (e.g., UAE, Qatar, Kuwait), several Caribbean jurisdictions (e.g., Bahamas, Cayman Islands), and a few others such as Monaco and Brunei. Most still levy VAT/GST, duties, or payroll/social charges.
What “Tax-Free Country” Really Means (Scope & Caveats)
“Tax-free” in everyday talk usually means no personal income tax (PIT) on employment income. It does not mean a place has no taxes at all. For instance, the United Arab Emirates (UAE) has 0% PIT but a 5% VAT and a federal corporate tax that started for most businesses in 2023 (9% over AED 375,000). The UAE’s own government portal states that it “does not levy income tax on individuals.”
Also note that some tax-free destinations are territories, not sovereign states (e.g., Cayman Islands, British Virgin Islands). In addition, residency rules and international reporting standards still apply. Many jurisdictions participate in the OECD’s Common Reporting Standard (CRS) for automatic exchange of financial account information, making “invisible banking” a myth in 2025.
A note on units & timelines
Residency tests commonly use time thresholds like 183 days (~6 months) in a calendar year. When jurisdictions announce reforms, expect lead times of months (≈0.5–1.0 years) before they start.
| Metric | Value / Note |
|---|---|
| No personal income tax (PIT) | Zero PIT on salaries/wages; other taxes may apply (e.g., VAT/GST, duties, social levies) |
| Residency day-count | Often 183 days (~6 months) per year to be resident; details vary by jurisdiction |
| Data currency | Reviewed “as of 2025”; some laws already scheduled to change later (e.g., Oman PIT from 2028) |
Where Are Tax-Free Countries? (Regional Overview)
Most zero-PIT jurisdictions cluster in two regions: the Gulf Cooperation Council (GCC) and the Caribbean & Atlantic, with a handful elsewhere (Monaco, Brunei, Vanuatu). Each uses other taxes to fund public services—commonly VAT/GST, excise, customs/import duties, or payroll/social levies.
Gulf Cooperation Council (GCC)
United Arab Emirates (UAE). No personal income tax; 5% VAT since 2018; federal corporate tax began for periods starting on/after 1 June 2023 (0% up to AED 375,000; 9% above). A 15% “top-up” applies to large multinationals under OECD rules. See the UAE’s official portal and Ministry of Finance updates.
Qatar. No tax on employment income; business income is taxed at 10%. As of mid-2025, Qatar has not implemented VAT (unlike the UAE, Saudi Arabia, Bahrain, and Oman).
Kuwait. No PIT; corporate tax mainly on foreign entities (15%). Kuwait has not implemented VAT as of 2025 but has introduced a 15% minimum top-up tax for large multinationals aligning with OECD Pillar Two.
Bahrain. No PIT; VAT is 10% (raised from 5% in 2022). Oil companies face a separate high CIT rate.
Oman. No PIT on wages today, but a personal income tax was approved in 2025 to take effect from 2028 (with implementation details pending). Oman introduced 5% VAT in 2021.
Saudi Arabia. No PIT on employment income; residents may be subject to zakat (for Saudi/GCC nationals on certain bases); VAT is 15% since 2020.
Caribbean & Atlantic
Bahamas. No PIT; VAT 10%; mandatory national insurance contributions apply. (PwC confirms zero PIT; see “Other taxes” for contribution rates.)
Bermuda. No PIT; instead, a payroll tax is levied (employer-borne with an employee share); no VAT/sales tax. See the Bermuda government’s payroll tax pages and KPMG’s summary.
Cayman Islands. No PIT, no corporate income tax, and no property tax; the government emphasizes a no direct taxes model (relying on fees and import duties).
British Virgin Islands (BVI). No PIT; a payroll tax exists (employer/employee) and import duties are common.
Anguilla. No PIT; a 13% GST took effect (legislated starting July 1, 2022) to broaden revenues.
Turks & Caicos Islands. No PIT; government revenue comes from customs duties, fees, and tourism-related taxes (no VAT).
Saint Kitts & Nevis. No PIT; however, there is a Housing & Social Development Levy deducted from wages (with thresholds and progressive bands). VAT is generally 17% (returning to 17% from a temporary cut).
Antigua & Barbuda. Abolished PIT in April 2016 (government announcement). Other taxes (ABST—its VAT, duties, etc.) still apply.
Europe & Asia-Pacific
Monaco. No personal income tax for residents (with a special exception for most French nationals under historical arrangements); standard EU-style VAT applies via arrangements with France.
Brunei. No personal income tax; corporate taxes and provident fund (TAP/SCP) schemes exist instead of classic PIT.
Vanuatu. No personal income tax and no corporate income tax; the country relies on VAT (15%) and other indirect taxes/fees (OECD profile).
Quick Comparison: No-PIT Jurisdictions
Use this table as a fast overview. Always check official guidance before making decisions, as rates and rules can change.
| Jurisdiction | Personal Income Tax | Other Headline Taxes | Residency & Notes |
|---|---|---|---|
| UAE | None | VAT 5%; Corporate Tax 9% over AED 375k; 15% DMTT for MNEs | Residence rules apply; wages not taxed; business income can be. |
| Qatar | None on employment income | CIT 10%; VAT not yet implemented (as of 2025) | Employment wages exempt; business income taxed. |
| Kuwait | None | CIT 15% (mainly foreign entities); no VAT (2025); 15% DMTT for MNEs | Social security for nationals; Pillar Two implemented. |
| Bahrain | None | VAT 10%; oil sector CIT 46% | Social insurance/unemployment schemes apply. |
| Oman | None (today) | VAT 5%; PIT law approved for 2028 start | Expect PIT from 2028; details pending. |
| Saudi Arabia | None on wages | VAT 15%; zakat; income tax on non-resident investment income | Employees not subject to PIT. |
| Bahamas | None | VAT 10%; National Insurance contributions | No PIT confirmed by PwC; contributions apply. |
| Bermuda | None | Payroll tax (employer/employee); no VAT | Gov payroll tax schedules published annually. |
| Cayman Islands | None | No direct taxes; import duties common | Gov states no income/corporation/property taxes. |
| British Virgin Islands | None | Payroll tax; customs/import duties | Gov confirms no income tax imposed. |
| Anguilla | None | GST 13% (in force) | Revenue pivoted to GST since 2022. |
| Turks & Caicos | None | Customs duties; tourism taxes; no VAT | Government materials emphasize no income tax. |
| Saint Kitts & Nevis | None | Housing & Social Development Levy; VAT 17% (from 2025) | Levy has thresholds and progressive bands. |
| Antigua & Barbuda | None (abolished 2016) | ABST (VAT), duties, property taxes | Gov announcement made in Jan 2016. |
| Monaco | None (exceptions for most French nationals) | VAT via arrangements with France; CIT in certain cases | Gov site outlines no PIT regime. |
| Brunei | None | Corporate taxes; provident schemes (TAP/SCP) | Gov MFA confirms no personal income tax. |
| Vanuatu | None | VAT 15%; fees and duties | OECD notes no PIT or CIT. |
For authoritative examples, see the UAE’s official tax portal, PwC’s Bahamas summary, and the OECD’s CRS by jurisdiction list for reporting participation.
How to Actually Benefit From a Tax-Free Jurisdiction
To benefit from zero PIT, most people need to become a tax resident of that place. Many countries use a significant presence test—often around 183 days (~6 months) in a single year—plus ties like a home, family, or business. If you remain tax-resident elsewhere, your “old” country may still tax you on worldwide income.
Citizens of some countries (notably the United States) are taxed on worldwide income regardless of residence. Treaties can modify outcomes, but U.S. citizens generally must file a U.S. return annually; start by checking the IRS’s treaty and guidance pages.
Banks and brokers in modern “tax-free” hubs follow CRS reporting. Expect routine sharing of account data between tax authorities—law-abiding by design.
Hidden Costs & Common Pitfalls
Indirect taxes and levies. Even where PIT is zero, you’ll likely pay VAT/GST (e.g., 5% in the UAE, 10% in Bahrain, 15% in Saudi Arabia, 5% in Oman), payroll/“social” levies (e.g., Bermuda payroll tax; St Kitts levy), and import duties (Cayman, BVI, Turks & Caicos). These can add up, especially for high spenders.
Cost of living and insurance. Housing, schooling, and private healthcare in glossy hubs (Dubai, Nassau, Hamilton) can offset tax savings. Budget carefully—and plan for comprehensive health cover if State coverage is limited.
Compliance & substance. If you run a business, new corporate tax rules (e.g., UAE CT at 9% with a 15% minimum top-up for large MNEs) and economic-substance requirements matter. Proper local presence and documentation aren’t optional in 2025.
Policy Watch: What’s Changing Next?
Oman’s PIT from 2028. Oman approved a personal income tax that will start in 2028, marking a major shift inside the GCC’s low-tax landscape. Details will determine who is taxed and at what thresholds.
GCC VAT rollout differences. The UAE (5%), Saudi (15%), Bahrain (10%), and Oman (5%) already apply VAT; Qatar and Kuwait have not implemented VAT yet as of 2025, though both are signatories to the GCC VAT framework.
Minimum taxes for big groups. Several hubs are aligning with the OECD 15% global minimum for large multinationals (e.g., UAE and Kuwait introducing domestic minimum top-up taxes). Expect continued implementation steps.
FAQ
Are there truly countries with zero tax?
Yes—but typically this means zero personal income tax, not zero tax overall. Most have VAT/GST, customs duties, or payroll/social levies. Examples with no PIT include the UAE, Bahamas, Cayman Islands, and Monaco (with caveats).
Can a U.S. citizen avoid U.S. taxes by moving to a tax-free country?
Not entirely. The U.S. taxes citizens on worldwide income. Treaties and exclusions can reduce double taxation, but annual filing is generally required. Start with the IRS treaty resources.
Is Oman still tax-free?
On wages, yes today—but Oman has approved a personal income tax starting in 2028. If you’re planning a move, watch official guidance for thresholds and exemptions.
What Did We Learn Today?
- “Tax-free” means no personal income tax—other taxes (VAT/GST, duties, payroll) still apply.
- The UAE, Qatar, Kuwait, Bahrain, Oman, and Saudi Arabia are the GCC’s zero-PIT group, with varying VAT and corporate tax rules.
- Caribbean/Atlantic hubs (Bahamas, Bermuda, Cayman, BVI, Anguilla, TCI, St Kitts & Nevis, Antigua & Barbuda) rely on VAT, duties, or levies instead of PIT.
- Elsewhere, Monaco, Brunei, and Vanuatu offer zero PIT with their own caveats.
- Rules evolve (e.g., Oman PIT 2028; VAT differences; OECD minimum taxes), so always check the latest official guidance.
