Explore a global phenomenon where countries are slashing corporate taxes to zero, creating havens that attract businesses worldwide. From remote Caribbean islands to secluded Pacific shores, these tax havens offer companies a rare opportunity: no corporate taxes, no income taxes, and often no capital gains taxes. But there’s a twist—some exemptions apply, like for financial services or high-profit sectors. Meanwhile, global initiatives are pushing back with minimum tax proposals to curb these havens, aiming to level the playing field and prevent massive revenue losses for other nations. Discover how this race to the bottom in tax rates is reshaping the financial landscape and the strategies countries are using to stay competitive in the global economy.
In today’s globalized world, setting corporation tax rates is frequently portrayed as a race to the bottom. A government can aim to attract more enterprises (or at least their headquarters) by offering a lower tax rate than other countries. This gives them a windfall of tax money that other jurisdictions miss out on.
For some, the race to the bottom has reached its final destination: zero.
Pallavi Rao of Visual Capitalist maps out the very tiny list of places with no corporate taxes in the graphic below.
The data for this map and essay is mostly drawn from Trading Economics and PwC Tax Summaries, as of June 2024.
Existence, Mortality, and Exemption from Corporate Taxes
The majority of countries and territories that do not impose company taxes are small island states in the Caribbean, Pacific, and British Isles.
Many of them do not pay income or capital gains taxes.
As a result, these locations are the listed headquarters of hundreds of firms from throughout the world and are frequently referred to as “tax havens.”
Aside from tax havens, several governments have less need for corporation taxes due to revenues from vital industries such as oil. However, they also have fine print that is worth reading.
Bahrain, for example, has no corporate taxes unless a company operates in the oil and gas sector, in which case it is taxed at a rate of 46%.
Banking and finance companies in the Crown Dependencies are subject to a 10% tax rate. Property income, retail businesses with taxable profits of more than £500,000, and cannabis companies are all subject to tax.
Meanwhile, Bermuda will implement a 15% business tax in 2025. This only applies to companies that are part of multinational corporations with annual revenues of $800 million or more.
The OECD has suggested a pact to prohibit multibillion-dollar tax havens, which includes a 15% minimum rate. According to the Financial Times, if a country’s corporate tax rate falls below the minimum threshold, other jurisdictions can implement a “top-up” tax to compensate. This decreases the incentive for tax havens to provide cheaper rates because other countries can raise tax collections at their expense.
Recently, GreatGameIndia reported that Alabama became the fifth state, following Utah, Wisconsin, Nebraska, and Kentucky, to pass legislation supporting sound money by abolishing income taxes on gold and silver.
