Tax breaks, deductibles, and incentives around the world

Some
countries offer different tax breaks than
others.

Kate
Hiscock/Flickr

• 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 $15,500) 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

Japan’s
system is mostly automated.

Flickr/PhillipTaylorPT

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 automated

80%

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 

Citizens of the Bahamas are not
taxed on their
individual income because of the high profits made from
tourism. 
There are
only

capital gains
taxes

, capital
transfer taxes, and estate taxes. 

6. Singapore doesn’t have a foreign income
tax 

Singapore makes this list because
of itslack 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 $1,000 per
month in pension for life.

Once accepted, residents can
indulge in a one-time tax break for imported goods (up to
$10,000). 
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 also has investment
incentives.
iStock

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 of


9%
.

 
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 benefit
from exponentially-lowered family tax rates in Canada. The
country also has some
of the lowest 
tax
rates for families around the globe. 

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.