There are few countries in the world where there are officially no taxes. Moreover, owing to the unique model of the economy of each country, these successfully exist and develop. Evidently, these countries have to possess some certain unique advantage, which would allow to use a tax-free economic model. The countries, which undergo the comparative analysis in our review, are Monaco, Bermuda, the Bahamas and the United Arab Emirates.
It is the country which is well-known for almost everybody, is famous for its traditions and history, and attracts the wealthiest people from all over the world. One of the major reasons of Monaco being so attractive is the absence of taxes for residents of this country. However, it should be noted that the tax incentives apply only to income of physical persons who permanently live in Monaco. Companies, which are registered in Monaco, are liable for taxation. Thus, Monaco, with its high costs for a living and record prices of the real estate, are appropriate only for very wealthy people.
Besides, if you, living in Monaco, would decide to open a business directly in Monaco - this option is unlikely to be attractive because of the taxes on business. As to the opening, for example, of production in Monaco, it is simply nowhere to open it – the whole area is very densely built up and the costs of premises starts from tens thousands of dollars per square meter and comes to a hundred thousand.
The procedure of obtaining the status of a resident of Monaco involves the fulfillment of significant number of requirements, and also provision of the detailed information about the source of income. Obtaining the residence permit is a long procedure, which is associated with the significant investments from several million dollars.
Bermuda is the islands located in the Atlantic Ocean. It is a country that offers the possibility of permanent residence with the complete absence of taxation of residents of the country. However such tax incentives are not applicable to companies which are registered in this country. The costs of living here is slightly lower than in Monaco, but the prices also require the availability of sound capital. In addition, the location of Bermuda is hardly suitable for those who carry on business with Europe, because of a very long distance and a significant difference in time zones.
It is the place where one can live and spend his money, but it is unlikely to be appropriate to carry on some business. For foreigners a real estate acquisition in Bermuda is only allowed for the properties of a certain category and with a high starting price – from several million dollars.
The starting price of the investments, which are necessary for obtaining the status of tax resident of this country, is from a few million dollars.
The Bahamas sounds magical and alluring. Weather, sea, comfort. The country offers the possibility of permanent residence with exemption from the personal income taxes.
At the same time the country's infrastructure is underdeveloped in some aspects, and, for example, if you will need some serious medical treatment – you’ll have to fly to another country. Besides, not all the places are safe in the Bahamas and in some places the situation is quite criminogenic.
Location of the Bahamas is not very practical in the case of working with Europe. Besides, the Bahamas, due to its infrastructure and specialization, is not an ideal place for carrying on business. And for staying it is great – everything is perfect. But if you want to have an active lifestyle and to remain in business, it can be a bit problematic when living in the Bahamas.
The United Arab Emirates
The UAE offers, as a matter of fact, the unique combination – exemption from taxes both for residents of the country and for business which is registered in the country. Thus, the country is characterized by a relatively small distance from Europe and by all the opportunities for carrying on business not only abroad, but also in the country. Besides, the perfect infrastructure for both living and business is available.
The UAE offers what none of the above-mentioned countries offer – exemption from the taxes, both for physical persons and for business. In all the other abovementioned countries you, as a matter of fact, will have to spend your time for keeping the status of a resident, for at least 180 days a year. But you will hardly carry on business in these countries. And the United Arab Emirates makes it possible, and you can either start a new direction of the business in the UAE or move an existing business into the UAE in its tangible part or only as the holding, management and administrative center.
From the point of view of the important components of life - in the UAE there is residential property of any type and for any budget, developed medicine, schools, universities, airports connecting to almost all the countries of the world and etc.
Obtaining a resident status of the country, which allows to achieve the exemption from taxation, takes only a bit more than a month in total and can be obtained either via the purchase of real estate or via a registration of a company.
For registration of the tax-exempted company in the UAE only couple days to two - three weeks are required - depending on the type of company.
The costs of living in the UAE are more than reasonable and are comparable with the most developed countries. Besides, there are no requirements to purchase an expensive property in order to obtain the status of a tax resident of the UAE – everything can be obtained over a UAE company which can also be very effectively utilized for business.
In the case of the availability of the company which is registered in the UAE and receives all the benefits of full exemption from taxation and according to your tax resident status in the UAE, you have the completely legitimate reason to carry on business inside the country and to receive the dividends being fully exempted from all the forms of taxation.
At the same time, what is particularly important nowadays, in the case of availability of your resident status in the UAE and a resident company in the UAE, you fully comply with the guidelines of determining the tax residency of the company, which are applied by the international regulations: the place of its registration, availability of office and place of effective company management.