Even if you work abroad, you will need to contend with taxes that can quickly deplete your funds. Some countries have minimal tax requirements for expats considering they are not permanent residents in the country. Others will have staggering tax requirements because of the benefits these expats can avail themselves of during their stay. A few may even be tax-free for expats, which can be a bonus if you are looking for maximum income each year.
If you want to enjoy your work overseas and earn a lot even with the deductions, here are the 10 best countries you should consider:
Taxes for expats in the UK are similar to their locals and will be based on the current income level. You are allocated a personal income of no more than £12,500. However, if your salary is more than £100,000, your personal income will be less. If you are earning between £12,501 to £50,000, your tax rate will be 20%. From £50,001 to £150,000, the rate will increase to 40% (double!). £150,000 onwards and your tax rate will be 45%.
Expats are given a progressive resident tax when they work in Singapore.
As a result, they may have to pay as high as 22% of their current income for taxes. Fortunately, the first $20,000 of any pay is tax-free while the rest will be taxable.
However, you are entitled to tax relief which means you can reduce the amount of income that is taxable.
Check out tax relief opportunities such as course fees relief, spouse relief, child relief, and parent relief.
United Arab Emirates
The UAE does not charge income tax for expats, but their salary levels are lower depending on the industry you are working in. You also do not need to contribute to public pension and retirement funding. However, do note that you may be liable for passive income like rental, dividend payments, interest on savings, and capital growth on stocks in your home country.
Hong Kong has one of the lowest tax rates for expats in the world. You will need to pay a 2 to 17% tax depending on current income or a 15% standard tax. Note that there is no capital gains tax in Hong Kong.
Employment tax comes with a 45% progressive tax rate. The first 4,800 yuan of your income is exempt from tax. If you have stayed in China for more than five years, your worldwide income will be taxable in China which includes investments either aboard or in China.
Income taxes in Turkey can range from 15% to 35% depending on your monthly income. Non-residents will be taxed on Turkey’s income only and there are no special taxes for expats. For 22,000 to 49,000 in Lire, your tax rate will be at 20%, while 49,001 to 180,000, your tax rate will rise up to 27% and beyond 180,000, your rate will reach 35%.
Like the UAE, Saudi Arabia does not charge personal income tax for both its locals and expats. There will be a 20% tax on income applied to the tax-adjusted profit of resident non-Saudis and non-GCC individuals.
South Korea has the same tax requirements as China.
They will add the income together and tax is based on a progressive rate.
There will also be monthly deductions for foreign workers depending on your industry.
Japan uses the same progressive income tax scheme used in Singapore for its workers. However, the tax will have national, municipal and prefectural tax. You are taxed on income other than foreign-source income, as long as you do not remit the foreign-source income into Japan.
Finally, Switzerland has the same tax requirements for expats as it does for its locals. Taxes vary depending on their location and income, so you may take home around $190,000 if you earn around $200,000 per year. Do note that expats are subjected to unlimited (worldwide) tax liability, and it is based on household rather than individual income.
Taxes are an inevitable part of being an employed worker, whether you are working locally or abroad. However, there are countries abroad that will help you enjoy more income despite the tax requirements that impact your pay every month.
Remember to plan your budget so you know how much income will remain after tax deductions are applied. What have you experienced tax-wise as an expat?
by: Kally Tay