- US citizens receive a variety of tax breaks and tax incentives.
- But, there are still many tax cuts, breaks, and incentives that citizens in other countries receive that Americans don’t.
- These tax cuts include corporate tax breaks, tax-free incomes, and business incentives.
Taxes in the US can be complicated, so it’s not surprising that the US has some of the highest rates of individuals looking to outside sources to complete their tax forms. According to a testimony before the Senate Finance Committee, 90% of Americans seek outside software and tax professionals to complete their taxes.
But even outside of the complexity that is the ever-changing tax system in the United States, there are a number of differences in the tax system that other countries benefit from.
So many countries around the world offer interesting and innovative tax cuts that citizens of the United States don’t benefit from. And, according to CNBC, at least 12 countries pay notably less in taxes than Americans do.
Here are 10 countries that offer tax cuts, breaks, and incentives that are not available in the US.
1. The United Kingdom exempts some of your income from taxes
Although not necessarily a tax cut, the United Kingdom exempts the first £11,850 (which is roughly $US15,500) made from taxes.
This means that regardless of how much you make, this first £11,850 you make lands in your bank account completely tax-free. This is not the case for individuals in the US.
2. New Zealand taxes its workforce less than the US does
New Zealand’s method of taxation follows the “broaden the base, lower the rates” (BBLL) philosophy. This means that the country taxes its average workforce exponentially less than other countries, including the United States.
This implementation was a result of the sweeping elimination of deductions and write-offs that occurred in the 1980s. But it has led to New Zealand being one of the lowest-tax countries in the world while still being able to collect more tax as a percentage of GDP.
3. Japan’s government has automated most of their tax collection process
What is so innovative about Japan’s tax structure isn’t so much its tax rates, but its forward-thinking way of conducting tax filing and collection. In Japan, the government has essentially automated80% of tax collection for households across the country.
This is in stark contrast to the American tax filing and collection system, which collectively costs Americans nearly nine billion hours each year.
4. Malaysia has some tax breaks for expats.
With a MM2H visa, expats can open a bank account in Malaysia and transfer as much money as they’d like, tax-free. Expats also don’t have to pay income tax. Malaysia is also known as one of the countries with the lowest personal income tax rates, which is 27% at its absolute highest.
5. The Bahamas doesn’t tax individuals on their income
6. Singapore doesn’t have a foreign income tax
Singapore makes this list because of its lack of foreign income tax, something many Americans would very much like to see incorporated into the US tax system. Even if your income is being paid into a Singapore bank account, don’t expect it to be taxed.
7. Panama has some tax breaks for those who are retired
Panama is a great country for retirees as some of the more notable tax cuts Panama has to offer are reaped by the retired. This is a result of Panama’s Pensionado Program.
This retirement program persuades retirees from “Panama-friendly” countries to enter and obtain residency as long as they show that they make at least $US1,000 per month in pension for life.
Once accepted, residents can indulge in a one-time tax break for imported goods (up to $US10,000). They will also get in-country perks including a percentage off entertainment, airline tickets, domestic travel tickets, energy bills, hotel stays, hospital bills, and more.
8. Hungary has a fairly low corporate tax rate
Hungary is a tax haven for corporations – it is one of the lowest-rated corporate tax companies in the world. That’s thanks to its current corporate tax rate of9%. In addition to this, big businesses also benefit from corporate tax incentive in the form of investment incentives and equipment incentives to bring more business to Hungary at lower costs.
9. Canadian families with children can benefit from lowered tax rates
Families with children – especially low-income families – benefit from these tax breaks, which is unlike anything American families experience.
10. Many countries implement a value-added tax system
The value-added tax (VAT) is a common system of taxation implemented across 160 countries in the world.The United States is one of the most notable countries that doesn’t implement this system.
This system of taxation takes into consideration profits made compared to the costs required to get there. It’s a consumption tax that is placed on the added value of a product or service instead of the entire product or service itself.
It’s a progressive system of business taxation that gives businesses across the country more breathing room throughout the taxation process. It takes into account the fluctuations in the market and the changes in manufacturing costs so that businesses don’t lose out.
Some countries that implement the VAT tax include Canada, China, Russia, Poland, and Ireland.
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