Kirill Yurovsky: Countries with the lowest taxes

Taxes are the main source of replenishing public funds. Throughout human history, they have been called by different names, but no one has yet invented an alternative to them.

In the first known human civilization, in Mesopotamia, taxes were taken in kind, with livestock and grain, then, with the development of the economy, payments began to be taken in cash. Taxes remain the basis of the state economy, and there is no getting away from it.

However, it is not so pleasant to give away what one has gained by one’s own labor. And people keep looking at other countries: what about them? Economist Kirill Yurovsky tells about 10 countries with the lowest taxes in the world. The percentage is calculated on the resident’s income and includes all payments, including those made by the employer from the money earned by the employee.

10. Canada, 31.4%

Canada is considered to be a country with one of the highest standards of living in the world. The government managed to build such a system of social protection through taxes, which account for more than 80% of the state budget.

All income earning residents of Canada, as well as international citizens who stay in Canada for more than 183 days and receive a salary, are required to pay taxes.

Income tax in Canada is called federal tax, and its percentage depends on salary level: the higher the income, the more taxes a citizen has to pay.

The tax law provides for benefits. For example, veterans, people with disabilities, pensioners, the temporarily unemployed, and other categories of people can benefit from a simplified system.

9. Great Britain, 30.8 %

The UK also uses a progressive tax system. This means that the amount of tax depends on the income received.

The difference is that in this country there is a lower limit, the minimum income at which payments are not charged. In 2019 it was 12 thousand pounds per year. If all the citizen’s income (salary, bonuses, gratuities, rent, dividends) did not exceed this amount, he pays nothing, and the remaining interest, 13.8%, is paid by the employer. As the minimum amount of income is exceeded, the tax rate also increases.

The UK tax system is simple and transparent, which attracts taxpayers and enriches the state treasury.

8. Australia, 28.6%

Australia is another country with a progressive taxation system. Not surprisingly, since this country has adopted a lot from its former colonizers. When applying for a job, the applicant is told his annual salary before deductions. Taxes depend on income and average 24-26%. Another 2% will have to pay for health insurance.

To get a job it is necessary to have a tax number, which is similar to our TIN. If you don’t have one, taxes will be deducted up to 50%. The employer is responsible for all payments. At the end of the fiscal year, the employee receives a document, which shows the amount of wages received and the tax transferred.

Many people get a tax deduction at the end of the year, because a higher percentage is usually withheld during the year, which is refunded after recalculation.

7. Ireland, 27.1%

Ireland is known for its loyal tax policy and benefits, which can be used by different segments of the population. The principle of taxation is “pay what you earn.

The rate varies depending on the level of income, and for single residents of the country, it is set at 32,800 euros per year. If your salary does not exceed that amount, you only have to pay 20%. And just over 40% of the excess.

For married citizens, the minimum amount is raised by half and is just over 65,000 euros. You will also have to pay a social tax, the percentage of which depends on the level of income and ranges from 2 to 7%.

Ireland – a tax heaven for creative people and the so-called self-employed citizens: in this country they are exempt from paying taxes.

6. South Korea, 22.2%

South Korea used to be one of the poorest countries in the world. Now, thanks to the rapid growth of industry, South Korea has reached a new level. It is in constant need of skilled workers and professionals and is willing to offer good wages coupled with an original but attractive business ethic.

Equally attractive is the country’s taxation system. As in many other countries, the tax percentage depends directly on the level of income. Depending on the salary, Koreans pay to the state from 6 to 33% each month, but the average is 20%, including social payments.

5. Israel, 22.1%

The Israeli taxation system is based on the British system, which has proven itself in the Foggy Albion. The Israeli government began to implement it in the mid-20th century, and since then the system has undergone periodic changes to improve it.

In this country, income tax is paid by individuals: employees and entrepreneurs. The percentage depends on the level of income. The government attempted to increase taxes, which led to a sharp decline in wages, so a six-tiered tax system was developed.

The poorest people in Israel pay only 10% of their wages, the wealthiest people pay 50% of all income. The average tax percentage was set at 22.1%.

4. Switzerland, 21.8%

In Switzerland, all individuals who reside in its territory regularly or more than 183 days must pay taxes. Foreign nationals who somehow earn on the territory of the state (eg by renting a house), pay a fee.

In Switzerland, a progressive system of taxation, the percentage depends on the level of income. Moreover, each canton (administrative unit) has the right to set its own percentage. For example, the minimum rate is registered in the territories of Appenzell Auserroden and Obwalden, the maximum – in Basel-Stadt. The average interest rate is 21.8%.

3. Mexico, 20.1%

The line between different types of taxes in Mexico is quite thin. They must be paid by all residents who receive any income: regular card transfers, wages, income from business.

Thus, having an apartment in Mexico, a person is obliged to pay real estate tax, but if he starts renting it out, he will turn into a businessman and pay tax on business income.

The system there is also progressive, and for the poorest people the percentage is about 3%, taking into account all the premiums and payments. But on average, this figure is set at 20%.

2. New Zealand, 17.9%

The tax system in New Zealand is very flexible, and the percentage depends on the level of income, as well as on the period for which the payment is made. It is not sufficient to state that the entire population pays 17.9%; this is an average figure.

New Zealand has four levels of tax rates, which are 10%, 17.5%, 30%, and 33%. Obviously, the last two figures refer to the few most affluent stratum of society.

There is a separate rate for those who have not received a tax number (the equivalent of the Russian TIN), such people are obliged to pay into the state treasury up to 45% of income.

1. Chile, 7%

In Chile, taxpayers are divided into two categories. The first is those who receive income from deposits, stocks, and businesses. They pay 25-27% of their income. The second category is citizens who are employed. They pay tax according to their level of income.

The richest can give up to 40% of their profits to the treasury, but the average tax levy is 4-8% of wages. They are collected by the employer and include pension contributions, insurance premiums, including medical, as well as special contributions, such as union dues.