Countries with the Lowest Taxes [2026]: Income, Corporate and Inheritance Tax Compared

Which countries have low taxes depends on which tax you compare. Countries with no personal income tax include the UAE (Dubai), the Bahamas, the Cayman Islands, Qatar and Monaco; countries that do not tax foreign-source income include Panama, Hong Kong and Georgia; and countries with low flat rates include Bulgaria (10%) and Hungary (15%). For corporate tax, the Bahamas and the Cayman Islands charge 0%, the UAE and Hungary 9%, and Bulgaria and Paraguay 10%. Japan, by contrast, has a top combined income tax and local inhabitant tax rate of about 55.9%, and taxes plus social insurance contributions amount to 45.7% of national income (the "national burden ratio", FY2026 forecast).

*Amounts and rules are as of October 16, 2026. This article is an English version of our Japanese guide, adapted for foreign residents of Japan and international investors.

However, moving to a low-tax country does not make all Japanese taxes disappear. Director's remuneration from a Japanese company, rent from Japanese real estate, exit tax on departure, inheritance tax, and Japan's controlled foreign company (CFC) rules for companies set up abroad can all still be taxed in Japan after you move. Based on information published by PwC Worldwide Tax Summaries, national governments, Japan's National Tax Agency and Ministry of Finance, this article covers:

• The four types of low-tax countries, and how they compare with Japan
• Countries with no income tax, countries that do not tax foreign income, countries with low rates, and countries with incentives for new residents
• A ranking of low corporate tax countries, and the 15% global minimum tax for large groups
• When Japanese taxes remain after you move (director's remuneration, real estate, inhabitant tax, exit tax, inheritance tax, CFC rules, tax treaties)

*This article is a general explanation based on information published as of October 16, 2026 (PwC Worldwide Tax Summaries, national governments, the National Tax Agency, the Ministry of Finance, the Ministry of Internal Affairs and Communications, etc.). Tax rates are mainly the top personal rate and the standard corporate rate, and each country's tax system may change. Actual tax amounts and residency determinations depend on individual circumstances, so please confirm filing and payment decisions with the tax office or a certified tax accountant.

Conclusion: low-tax countries fall into four types

"Low-tax countries" are easier to compare when you divide them into four types according to which tax is low.

Ranking of countries with low income tax

Ranked by the top personal income tax rate, from lowest:

Note, however, that whether you become a non-resident of Japan depends not on the destination's tax rate but on where your center of life is, and some Japanese taxes remain even after you become a non-resident (see When Japanese taxes remain after you move). When choosing a low-tax country, you need to check both the destination's tax system and the taxes that remain in Japan. The overall procedures before and after leaving Japan are covered in Taxes and resident registration when moving abroad.

Countries with no income tax

The following countries and territories have no income tax on individuals' salaries or investment gains (checked against the PwC Worldwide Tax Summaries country pages, and government pages for Monaco and Vanuatu).

Even in countries with no income tax, the cost of living is not low. The UAE has high rents and school fees, and housing costs in Monaco, the Cayman Islands and Bermuda are among the highest in the world. In Middle Eastern countries, estates may also be divided under Islamic law, so separate inheritance planning is needed. Dubai's tax system and the taxes that remain in Japan are explained in Is there no tax in Dubai (UAE)?, and how to obtain a visa in Requirements and costs of moving to Dubai.

Countries that do not tax foreign income

Some countries tax income earned domestically but not income earned abroad (territorial taxation). For people whose income mainly arises outside the destination country, such as from overseas investments, the effect is close to that of a no-income-tax country (rent, dividends and other income arising in Japan are still taxed in Japan).

Be aware that what counts as "foreign income" differs from country to country. In particular, in many countries, pay for work you do remotely while living in the destination country is taxed there as domestic income, even if the payer is a Japanese company or client. Even in countries that do not tax foreign income, the tax of someone who continues Japanese work locally does not become zero (Georgia has a small business regime that taxes sole proprietors with turnover under GEL 500,000 at 1% of turnover). Paraguay treats fees for services provided from abroad to domestic businesses as domestic income, and Thailand does not tax foreign income unless it is remitted, but taxes it in the year it is remitted. Malaysia's exemption for foreign income has an expiry date. You need to check whether each type of income, such as working locally, running a business or receiving a pension, is taxed. How pensions are received is explained in Can you move abroad on a pension?

Low-rate countries and incentives for new residents

Countries with low flat income tax rates

Some countries tax worldwide income but have low rates. Bulgaria has a flat 10% (capital gains on shares sold on EU/EEA regulated markets are exempt; dividends 5%), Hungary a flat 15% (inheritance and gift tax is 18%, or 9% for residential property, with direct relatives, spouses and siblings exempt), and Estonia 22%. Georgia has a flat 20% and does not tax foreign income.

Countries with incentives for new residents

Some countries with high normal rates offer regimes such as a flat tax on foreign income for people who move there.

These regimes favor wealthy people with large foreign income, but for anyone receiving director's remuneration or rent in Japan, taxation on the Japanese side remains. They are often considered together with residence-by-investment (golden visas); the regimes are compared in What is a golden visa?

Ranking of low corporate tax countries

The main countries and territories with low standard corporate tax rates (tax on company profits) are as follows.

However, for multinational groups with annual revenue of EUR 750 million or more, a minimum tax regime that imposes top-up tax on the portion below a 15% effective rate (the global minimum tax) has started in many countries. The UAE, Hong Kong, Singapore, Qatar and others have applied it since 2025. Japan applies the income inclusion rule from fiscal years starting on or after April 2024, and the domestic minimum tax from fiscal years starting on or after April 1, 2026. This does not directly affect small companies or owner-managed companies, but when a Japanese company or individual sets up a company in a low-tax country, it may fall under Japan's controlled foreign company (CFC) rules (see Moving companies or assets abroad).

How heavy is Japan's tax burden?

As a benchmark for comparison, Japan's main tax rates and burden levels are summarized below.

From January 2027, the special reconstruction income tax falls to 1.1% but a 1% special defense income tax is added, so the top income tax rate (45.945%) stays the same. The additional tax on extremely high incomes affects people with large capital gains on shares in particular, and is also covered in Stronger minimum tax and exit tax explained.

In international comparisons, Japan ranked 22nd out of 38 OECD countries in the US think tank Tax Foundation's "International Tax Competitiveness Index 2025", with Estonia ranked first for the 12th year in a row. This index evaluates not only low rates but also the simplicity and neutrality of the system, so it does not match a "ranking of low-tax countries".

When Japanese taxes remain after you move

Can you become a non-resident of Japan? It depends on your center of life

A resident of Japan is "an individual who has a domicile in Japan, or has continuously had a residence in Japan for one year or more up to the present". Domicile means the center of one's life and is determined by objective facts (National Tax Agency No. 2875). A person is presumed not to have a domicile in Japan if they leave Japan to take up work that normally requires living abroad continuously for one year or more, or if they have foreign nationality or foreign permanent residence and there are no facts suggesting they will return to Japan, such as family sharing their livelihood in Japan (National Tax Agency No. 2875, attachment). For moves not involving work, the determination is based on facts such as where your family lives, your assets and your home. Japan's test contains no "183 days" rule.

Income taxed in Japan even for non-residents

• Director's remuneration from a Japanese company: even if you work abroad as a director of a Japanese company (domestic corporation), the remuneration is treated as income arising in Japan and 20.42% is withheld (National Tax Agency No. 1929; except, for example, where you work abroad full-time as an employee)
• Rent from Japanese real estate: 20.42% withholding (except where an individual rents it as a home for themselves or relatives). In principle a tax return is required, and you must also notify the tax office of a tax agent who files and pays on your behalf in Japan (National Tax Agency No. 2884, No. 1926)
• Dividends from Japanese companies: 15.315% withholding for listed shares (20.42% for major shareholders holding 3% or more of issued shares, and for unlisted shares). Tax treaties may reduce this
• Royalties such as copyright fees: copyright royalties or consideration for transfer received from a Japanese company (such as fees for using designs or manuscripts) are subject to 20.42% withholding (may be reduced by tax treaties). Payment for the work itself performed abroad is, in principle, not taxed in Japan

Inhabitant tax depends on your address on January 1

Inhabitant tax is levied by the municipality where you have your address on January 1, on the previous year's income (Ministry of Internal Affairs and Communications). Even if you leave Japan during the year, inhabitant tax for that fiscal year is still due. Conversely, if you move out of Japan by December 31 with plans to stay abroad for one year or more and have no address in Japan on January 1, no inhabitant tax is due for the following fiscal year.

Exit tax (taxation on departure from Japan)

If, at the time of departure, you hold securities such as shares and investment trusts (including unsettled derivative transactions) worth JPY 100 million or more in total, and you had a domicile or residence in Japan for more than 5 of the 10 years before departure, you are treated as having sold them on departure and unrealized gains are taxed (National Tax Agency No. 1478). The rate is the same as for capital gains on shares, 15.315%; for example, if unrealized gains (market value minus acquisition cost) are JPY 1 billion, income tax etc. is about JPY 150 million (for departures in 2026). For departures from 2027, the additional tax on extremely high incomes (JPY 165 million, 30%) is added and the burden may increase further. Payment can be deferred for 5 years (extendable to a maximum of 10) on conditions such as notifying a tax agent before departure, entering details in your tax return, providing collateral and filing a continuation notice every year. Crypto-assets are not covered, but while you are a resident of Japan they are taxed as miscellaneous income at up to about 55.9%. Similar taxation applies when securities are gifted or inherited to family members living abroad.

Inheritance tax: the 10-year rule

If the heir is a Japanese national, Japanese inheritance tax applies to foreign assets as well if either the deceased or the heir had a domicile in Japan within the past 10 years. Even if the heir is a foreign national, the same applies if the deceased was a Japanese national with a domicile in Japan within the past 10 years (gift tax works similarly). A list of countries without inheritance tax and the conditions is explained in Countries with no inheritance tax and the 10-year rule.

Moving companies or assets abroad: CFC rules and tax treaties

Controlled foreign company (CFC) rules (anti-tax haven rules)

If a resident of Japan or a Japanese company accumulates profits in a company set up in a low-tax country, those profits can be added to the income of the Japanese shareholders and taxed (Ministry of Finance, "Overview of the CFC rules").

• Foreign companies covered: foreign companies in which residents of Japan, Japanese companies, etc. together hold more than 50% of the shares, directly or indirectly
• Shareholders subject to inclusion: Japanese companies, residents, etc. holding 10% or more of the company's shares, directly or indirectly
• Exemption thresholds: the foreign company's actual tax burden ratio is 20% or more (27% or more for paper companies without substance, etc.). Also, if economic activity tests such as business substance are met, the company's income as a whole is not included (passive income such as dividends and interest is still included)

Because these rules tax residents of Japan and Japanese companies, they do not directly apply to a person who has genuinely become a non-resident of Japan. However, if the move or the substance of the foreign company is weak, you may be judged to be a resident or transactions may be denied. In addition, tax may be imposed (1) on a Japanese company, if you hold the foreign company through it; (2) on family members remaining in Japan, if they hold shares; or (3) on you, if your center of life remains in Japan and you are judged to still be a resident. The more-than-50% test also counts holdings of non-residents with a special relationship to residents of Japan, such as the person who moved abroad, and even if the holding of family remaining in Japan is small, it may be covered if the family shareholder group holds 10% or more. If you plan to set up a company in a country with 0% or 9% corporate tax, check with a certified tax accountant in advance.

Selling Japanese shares after you move

On the other hand, gains made by non-residents on selling Japanese shares are, in principle, not taxed in Japan. However, they are taxed in Japan in cases such as where a shareholder who, together with relatives and related companies, held 25% or more of the issued shares (at any time within the 3 years up to that year) sells 5% or more in that year (sales similar to a business transfer), or where the shares are of a company with 50% or more of its assets in Japanese land etc. and the holding of the person and related parties exceeds 5% for listed shares or 2% for unlisted shares (tax treaties may change the treatment). Company owners who plan to sell their own company's shares after moving should check in advance.

Whether Japan has a tax treaty with the country

Tax treaties prevent double taxation between Japan and the other country and allow tax authorities to exchange information. The status for the main countries, according to the Ministry of Finance list (as of June 26, 2026), is as follows.

In countries without a tax treaty, the Japanese withholding rate on dividends, interest and royalties is not reduced by a treaty (director's remuneration is subject to 20.42% withholding in Japan even with a treaty). Meanwhile, many countries and territories take part in the Common Reporting Standard (CRS), under which tax authorities automatically exchange financial account information, so information on overseas accounts held by residents of Japan reaches the Japanese tax authorities (after you become a non-resident, it is in principle reported to the authorities of your new country).

FAQ

Which country has the lowest taxes in the world?

The Cayman Islands is a typical example of a country or territory with no personal income tax, corporate tax, VAT or inheritance tax. However, living costs such as housing are high, and visa conditions for living there differ from country to country (see Easiest countries to get permanent residence). For income tax alone, the UAE or the Bahamas, and for no tax on foreign income, Panama or Hong Kong are also candidates; which is "the lowest" depends on which tax you compare.

If I move to a country with no income tax, will my Japanese taxes become zero?

No. If your center of life remains in Japan, you remain a resident of Japan and Japanese tax applies to your worldwide income. Even after you become a non-resident, Japanese tax applies to director's remuneration from a Japanese company, rent from Japanese real estate and dividends on Japanese listed shares, and inhabitant tax for the year of departure, exit tax and the 10-year inheritance tax rule also remain.

What happens if I live abroad and receive director's remuneration from a Japanese company?

Director's remuneration from a Japanese company is treated as income arising in Japan even if you work abroad, and 20.42% is withheld. Even if you live in a country with no income tax, such as the UAE, Japanese withholding does not go away.

Will setting up a company in a 0% corporate tax country save tax?

If residents of Japan or Japanese companies hold more than 50% of that company's shares, its profits may be added to the Japanese shareholders' income under the CFC rules. If you hold an overseas company while living in Japan or through a Japanese company, Japanese tax is imposed on the overseas company's profits, cancelling out the low corporate tax.

If I spend 183 days or more abroad, do I become a non-resident of Japan?

183 days is not Japan's residency test. Japan looks at whether you have a domicile (center of life) or have had a residence for one year or more. Even if you spend 183 days or more abroad, you may be treated as a resident if your family or work base is in Japan. Many destination countries, however, do use 183 days in their own residency tests (Thailand uses 180 days and Paraguay more than 120 days).

Which countries have low taxes for people living on a pension?

Thailand's Long-Term Resident (LTR) visa pensioner category exempts foreign income, but requires being 50 or older with pension or other income of US$80,000 or more a year (or, for US$40,000-80,000, an investment of US$250,000 or more, etc.). Malaysia conditionally exempts foreign income received in Malaysia until 2036, and Greece has a 7% regime on pensioners' foreign income. Japanese public pensions are subject to 20.42% withholding after certain deductions even for non-residents. However, in countries whose tax treaty with Japan provides that pensions are taxed only in the country of residence, Japanese withholding is exempted if you file a notification (countries such as Thailand whose treaty has no pension article are not covered). People who live mainly on a pension often do not have a heavy Japanese tax burden to begin with, so it is more realistic to choose a country based on prices, healthcare and visa conditions than on tax rates (see Can you move abroad on a pension?).

Summary: check the Japanese taxes that remain before comparing tax rates

Low-tax countries fall into four types: countries with no income tax (the UAE, the Bahamas, the Cayman Islands, etc.), countries that do not tax foreign income (Panama, Hong Kong, Georgia, etc.), countries with low rates (Bulgaria, Hungary, etc.), and countries with incentives for new residents (Italy, Greece, Portugal, etc.). On the other hand, whether you become a non-resident of Japan depends on your center of life, and even as a non-resident, director's remuneration from a Japanese company, rent from Japanese real estate, inhabitant tax, exit tax, inheritance tax and the CFC rules may remain. Organize your income and assets, confirm which Japanese taxes remain, and then compare destinations together with how easy it is to get a visa and the cost of living.

Countries often considered, by goal

What to organize before consulting a tax accountant

• Types of income and who pays them (director's remuneration, rent, dividends, royalties, business revenue, pensions)
• Breakdown of assets and unrealized gains (own company shares, listed shares, real estate, overseas accounts and companies)
• The country each family member plans to live in, and your planned departure date
• Whether you will work in the destination country or continue your work in Japan

References (primary sources)

• PwC Worldwide Tax Summaries: personal income tax rates
• PwC Worldwide Tax Summaries: corporate income tax rates
• PwC Worldwide Tax Summaries: VAT rates
• PwC Worldwide Tax Summaries: inheritance and gift tax rates
• PwC Worldwide Tax Summaries: individual and corporate taxation by country (residency, foreign income, incentives)
• PwC Middle East: Oman introduces personal income tax
• Government of Monaco: Tax in Monaco
• Government of Monaco: Corporate income tax
• Vanuatu Investment Promotion Authority: Low tax jurisdiction
• Thailand Board of Investment: tax essentials for LTR visa holders
• Swiss Federal Tax Administration: taxation based on expenditure
• Tax Foundation: International Tax Competitiveness Index 2025
• National Tax Agency: Tax Answer No. 2875, residents and non-residents
• National Tax Agency: Tax Answer No. 2875 attachment, presumption of domicile
• National Tax Agency: Tax Answer No. 1929, salaries paid to directors working abroad
• National Tax Agency: Tax Answer No. 2884, withholding rates for non-residents
• National Tax Agency: Tax Answer No. 1926, real estate income of non-residents
• National Tax Agency: Tax Answer No. 1478, special rules on capital gains on departure from Japan
• National Tax Agency: Tax Answer No. 1463, taxation on the sale of shares
• National Tax Agency: Tax Answer No. 2260, income tax rates
• National Tax Agency: Tax Answer No. 2270, measures on extremely high incomes
• Ministry of Finance: outline of the FY2026 tax reform
• Ministry of Finance: overview of the CFC rules
• Ministry of Finance: list of Japan's tax treaties
• OECD: status of the Convention on Mutual Administrative Assistance in Tax Matters
• Ministry of Finance: international comparison of effective corporate tax rates (as of January 2026)
• Ministry of Finance: overview of value-added taxes in other countries (as of January 2026)
• Ministry of Finance: national burden ratio for FY2026
• Ministry of Internal Affairs and Communications: individual inhabitant tax
• National Tax Agency: Tax Answer No. 4155, inheritance tax rates

Tax rates and regimes in this article are based on information published as of October 16, 2026 (the PwC Worldwide Tax Summaries country pages were reviewed between February and October 2026).