On a global scale, several countries have opted to maintain low corporate tax rates to attract foreign investments and foster economic growth. Below is a list of ten countries that, while not completely eliminating corporate tax, offer very low rates, making them attractive destinations for international businesses. The reason for excluding those with no corporate tax is that they are considered tax havens by many jurisdictions, making it very complicated to operate with or through those jurisdictions. Additionally, some of the countries on the list do not have the best reputation, but are nonetheless making efforts or adapting their regulations to avoid such a reputation.
I. Hungary
Tax Rate: 9%
Hungary offers the lowest corporate tax rate within the European Union, which has stimulated direct foreign investment in the country. It has implemented a particularly significant tax rate reduction over the last 8 years. The personal income tax rate is also low, with a flat rate of 15% and several exemptions.
II.United Arab Emirates
Tax Rate: 9%
Recently, the UAE introduced a 9% tax on profits exceeding 375,000 AED (just under €100,000 annually), with a 0% rate up to that threshold. It has been one of the fastest-growing countries in recent decades, but its lack of democracy and dependence on oil make its future uncertain. Currently, there is no personal income tax, but it may eventually be imposed due to international pressure to avoid financial isolation.
III.Montenegro
Tax Rate: 9%
This Balkan country attracts entrepreneurs with its low tax rate and beautiful landscapes, promoting a business-friendly environment. It applies the same 9% rate for personal income tax.
IV.Andorra
Tax Rate: 10%
Since 2015, Andorra has undergone an unprecedented regulatory transformation, shedding its stigma as a tax haven. It is not only known for its natural beauty but also as a business hub with an attractive corporate tax rate, ski resorts, and high security. It is one of the countries on the list with the highest quality of life. Its personal income tax rate is also one of the lowest, with a nominal rate of 10%.
V. Bulgaria
Tax Rate: 10%
With a low corporate tax rate, Bulgaria is positioned as a favorable destination for business in Europe. It applies the same rate for the personal income tax of its residents.
VI. North Macedonia
Tax Rate: 10%
North Macedonia stands out in the Balkans for its favorable tax system and open-door policy for foreign investors. It also applies low rates, with a maximum of 10% for personal income tax.
VII.Bosnia and Herzegovina
Tax Rate: 10%
Bosnia and Herzegovina has reformed its tax system to attract more foreign investment, offering a competitive corporate tax rate. Like Macedonia, it also applies low rates.
VII. Paraguay
Tax Rate: 10%
Paraguay not only offers a low corporate tax rate but also provides access to important markets in Latin America, making it a strategic location for business.
IX. Cyprus
Tax Rate: 12.5%
Cyprus combines its low tax rate with a strategic location in the Mediterranean, attracting various international companies. However, personal income tax can go up to 25%.
X. Ireland
Tax Rate: 12.5%
Ireland remains attractive to international companies thanks to its competitive corporate tax rate and business-friendly environment. It is easy to find qualified, English-speaking staff, making it an ideal destination for large corporations. However, personal income tax rates are much higher, reaching up to 40%.
Other considerations
However, there are many other relevant factors to consider when choosing a location to establish a company or develop a business, such as cultural elements, climate, geographical location, common languages, political system, banking system, infrastructure, and economic stability. Despite this, in a world that generally favors simplification, it is inevitable to make comparisons that, in many cases, result in excessive oversimplification.