Personal Finance: 5 Countries with Zero Income Taxes : Bryan Ellis ...

Although moving to an exotic locale without income taxes may sound like paradise, some of the associated taxes and political costs may give you pause.

You have probably heard news coverage about wealthy Americans renouncing their U.S. citizenship not because of philosophical issues with the country or a desire to make a political statement, but instead simply to save money on their taxes. One of the most recent and widely-covered examples of this is Facebook co-founder Eduardo Saverin, who renounced his citizenship immediately before the social network went public, reportedly saving himself millions and millions of dollars in taxes. Saverin paid an ?exit tax? that included ?approximately 15 percent of the pre-IPO value of his shares,? but will not pay capital gains now that he lives in Singapore[1].

Think that no income taxes sound like a good idea? Here are 5 countries with no income taxes that might be calling your name[2]:

1. United Arab Emirates
   Instead of relying on income taxes for revenue, this country relies on taxes from oil companies. The UAE is the third-biggest exporter of crude in the world. UAE citizens also must contribute five percent of their total earnings for social security.
2. Oman
   This country also derives most of its revenue from crude oil but requires contributions of 6.5 percent for social security. Property purchases are also taxed at three percent. Of course, you might not really want to live in Oman right now, thanks to 24.4 percent unemployment and turmoil created by the Arab Spring.
3. Cayman Islands
   Although this country has no income taxes, value added taxes, or government sales taxes, import duties can be as high as 25 percent and the cost of living is extremely high. Average home prices are more than three-quarters of a million dollars.
4. Bermuda
   Although there are no income taxes in Bermuda, there are a variety of ?contributions? that could eat into your paycheck if you work there. Workers may be required to contribute 5.75 percent on a payroll tax and must pay a little over $30 each week toward social security insurance. There are also a variety of stamp duties and other transactional taxes, and the cost of living is right up there with the highest in the world.
5. Bahamas
   The Bahamas may have no income tax, but it also has 15 percent unemployment. 70 percent of government revenue stems from import duties in this country, and self-employed individuals must pay a hefty 8.8 percent of their salary to ?National Insurance,? a form of social security.

Would you renounce your citizenship to avoid paying income taxes? If so, where would you move?

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[1] http://abcnews.go.com/blogs/business/2012/05/facebook-ipo-eduardo-saverin-defends-citizenship-move/

[2] http://www.cnbc.com/id/48054006?slide=2

Category: Personal Finance

Source: http://investing.bryanellis.com/2767/personal-finance-5-countries-with-zero-income-taxes/

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