Escape Income Tax: The East

How would you like to stop paying any income tax for the rest of your life? In this short series, I'm going to explain how this is done 100% legally by moving to Central America, South America, Europe & Africa, and Asia.

Unlike our American friends who must file and pay applicable income taxes based on citizenship regardless of where they live, there is an easy way for Canadian citizens to legally avoid paying income tax forever.

Read my first post of this mini series for more information on the proper way to become a non-resident of Canada for tax purposes, manage your accounts, and invest through an overseas brokerage for expats.

Countries with No Tax on Investment Income

There are a significant number of countries around the world which do not tax investment income on money located outside of the country you reside in. Other countries do not charge capital gains taxes on worldwide income. Both of these are countries I will focus on where you can legally not pay a dime in income tax for the rest of your life!

My picks include countries which have more stable governments, are known to be friendly to expats, and are quite safe for foreigners. I'm also only considering options which have a moderate cost of living.

Some of the better known micro-states or islands with huge tax advantages are prohibitively expensive and only an option for the super-rich. In this region, Hong Kong, Singapore, Macau, and some of the micro-islands in the Pacific are excluded even though they are open to foreigners and have appealing tax programs.

My Picks in The East

1. Malaysia

Edited Photo. Source: Flickr - David Johnson

Top of the list for me in this region is the country of Malaysia. Malaysia is a unique country where east meets west, Islam meets Buddhism, and towering jungle mountains meet white sand beaches. It is a progressive Muslim-majority country with a vibrant economy, great tax breaks, fantastic infrastructure, and easy access for expats. It offers the most stability and business freedom in the developing east.

Income Tax:  Low - No tax on any overseas income. Moderate tax on local income. No tax or prohibitive restrictions on imported personal belongings under the MM2H visa.

Obtaining Residency:  Easy - Malaysia offers the leading Malaysia My Second Home (MM2H) visa to economically self-sufficient individuals for 10-year periods. Renewal is also easy. You must have total assets of approximately $150,000 USD and a monthly offshore income of $2,500 USD. Also, the program requires a deposit of approximately $50,000 USD into a Malaysian bank. Up to half of this deposit can be taken out after one year for certain purposes. These requirements are lower for individuals over fifty years old.

Climate:  Moderately Low - Malaysia is a thoroughly tropical country so it is hot and humid everywhere all the time. It rains year round, but there's also plenty of sunshine. Common expat islands, Penang and Langkawi, have amazing beaches.

Cost of Living:  Moderately Low - The cost of living in Penang and Langkawi is 50 - 70% cheaper than a large city in Canada. Kuala Lampur is more expensive. Malaysia's cities are amazingly cheap considering they have highly developed first-world infrastructure.

English Speakers:  High - The majority of Malaysians speak English. The local language is actually Malay and Chinese, but it's not necessary to learn these languages to get by in Malaysia.

Freedom:  Moderate - Malaysia performs well in governance and economic freedom. Personal freedom is lower; this is not surprising in a Muslim-majority country. Generally speaking the government has a lot of control, but is efficient and quite progressive. Property rights are well structured and it's easy to do business in Malaysia. In many ways Malaysia may be the next Singapore or South Korea. While Penang and Langkawi are safe, there are crime issues in many areas of Kuala Lampur.

2. New Zealand

Edited Photo. Source: Flickr - iTravelNZ

New Zealand is a fully developed, free, and very competitive country that earns a spot on this list. While it's certainly more comfortable and familiar to live in than the other countries in this mini series, it's also not a developing country and is much more expensive than the others. However, New Zealand has a unique tax allowance which makes it very appealing over most other developed countries.

Income Tax:  Moderate - Competitive tax on worldwide and local income less than 17.5% on incomes under $48,000 NZD ($43,000 CAD). New Zealand does not levy a capital gains tax on most investments, whether local or offshore! It's possible for someone with a large investment account to pay very, very low tax rates.

Obtaining Residency:  Moderately High - New Zealand has a relatively robust immigration program which offers many routes to permanent residence. Canadians under thirty-five can stay on a working holiday visa for up to twenty-three months. Under the age of fifty-five, it's relatively simple for an English speaking individual with a university degree or skilled trade, who is easily employable or willing to start a business to obtain permanent residence. There are also wealth visa schemes, but these require millions in assets.

Climate:  Appealing - New Zealand has a wide variety of climates ranging from subtropical in the north to cool oceanic in the south. Generally speaking there are no major cities with temperatures that sink well below freezing. Rainfall is moderate for the most part and sunshine is plentiful in many areas.

Cost of Living:  High - The cost of living in New Zealand is comparable to Canada. The cost of living mostly varies by location due to real estate cost differences. The largest cities, Auckland and Wellington, are very pricey.

English Speakers:  High - New Zealand is an English speaking majority country.

Freedom:  Very High - New Zealand boasts top scores globally in freedom. Elections are free, governance is transparent, and personal freedom is sky-high. Economically and for business, New Zealand consistently takes top scores ranking well above Canada and the United States. Crime rates are very low.

3. Thailand

Edited Photo. Source: Flickr - Twentyfour Students

Thailand would probably be at the top of my list in Asia if not for two factors: difficulty obtaining stable visas and a more stable, progressive government. Thailand has a variety of climates and destinations for expats. It's also cheap and expat friendly.

Income Tax:  Moderately Low - No tax on any overseas income that is not remitted in the year it was earned. Taxes apply on imported personal belongings.

Obtaining Residency:  Somewhat Difficult - It's difficult for younger foreigners to obtain stable residency in Thailand. The best route is probably by applying for education visas and taking courses in scuba diving, Thai kickboxing, massage, or by teaching English. These visas only are good for a year and renewal seems to be hit and miss. Some people try visa run strategies to stay on temporary visas, but this is also unreliable. For individuals over fifty years old there's a renewable one-year retirement visa that is easy to obtain with a bank deposit of $20,000 USD.

Climate:  Moderate - Thailand offers great tropical beach climates in Phuket and Hua Hin. Phuket has more rainfall of the two, but both are humid. Located in the northern interior highlands, Chiang Mai is known to have the most moderate climate in Thailand. On the coast, Bangkok is a hot and humid city, especially in the rainy season.

Cost of Living:  Moderate - The cost of living is 30 - 60% cheaper than a large city in Canada. This varies widely with Bangkok and Phuket being on the more expensive side while Chiang Mai and Hua Hin are quite reasonable.

English Speakers:  High - The Thai are known to have good English skills, especially in the popular expat areas of Bangkok, Phuket, Hua Hin, and Chiang Mai. Basic knowledge of Thai goes a long way with locals.

Freedom:  Moderately Low - Thailand is generally safe for expats, but there are many other freedom issues here. The government is known to be corrupt, the courts are unreliable, property rights are not secure, and the country is generally a quagmire of red tape. Within tourist/expat areas especially, property crime is pretty bad. Thankfully violent crime is not and the Thai are generally friendly and relaxed.

Have you considered moving overseas on a more permanent basis? What would be your priorities in choosing a place to live?

Comments & Questions

All comments are moderated before being posted for public viewing. Please don't send in multiple comments if yours doesn't appear right away. It can take up to 24 hours before comments are posted.

Comments containing links or "trolling" will not be posted. Comments with profane language or those which reveal personal information will be edited by moderator.

Escape Income Tax: Europe & Africa

How would you like to stop paying any income tax for the rest of your life? In this short series, I'm going to explain how this is done 100% legally by moving to Central America, South America, Europe & Africa, and Asia.

Unlike our American friends who must file and pay applicable income taxes based on citizenship regardless of where they live, there is an easy way for Canadian citizens to legally avoid paying income tax forever.

Read my first post of this mini series for more information on the proper way to become a non-resident of Canada for tax purposes, manage your accounts, and invest through an overseas brokerage for expats.

Countries with No Tax on Investment Income

There are a significant number of countries around the world which do not tax investment income on money located outside of the country you reside in. Other countries do not charge capital gains taxes on worldwide income. Both of these are countries I will focus on where you can legally not pay a dime in income tax for the rest of your life!

My picks include countries which have more stable governments, are known to be friendly to expats, and are quite safe for foreigners. I'm also only considering options which have a moderate cost of living.

Some of the better known micro-states or islands with huge tax advantages are prohibitively expensive and only an option for the super-rich. In this region, countries like Switzerland, Monaco, Seychelles, and Mauritius are excluded despite having very appealing tax regulations.

My Picks in Europe & Africa

1. Georgia

Edited Photo. Source: Flickr - jagermesh

Top of the list for me in this region is the country of Georgia. Saddled on the border of Europe and Western Asia along the Black Sea, Georgia is a former communist state which has vigorously adopted capitalism in the last decade or so. The climate is varied and mild, the country is beautiful, it's cheap, and Georgia is making huge strides to achieve lasting prosperity.

Income Tax:  Low - No tax on any overseas income. Low tax on local income.

Obtaining Residency:  Easy - A Canadian can travel to and stay in Georgia visa-free for up to a year. If you want to stay longer, you can get a residence permit by making an investment of more than $120,000 USD in the country. This includes property investment or starting a business. The government is very business friendly and fosters entrepreneurship.

Climate:  Appealing - The coastal cities have a cooler subtropical climate with higher rainfall and temperatures which rarely fall below freezing. Summers are long and warm, but typically not extremely hot. The inland cities have a continental climate similar to the Okanagan Valley in B.C. Summers are warm, winters are relatively short and mild, and rainfall is low. It's a sunny, nearly perfect four season climate.

Cost of Living:  Low - The cost of living is 60 - 70% cheaper than a large city in Canada.

English Speakers:  Moderate - English speaking abilities are more common among younger people in the larger cities of Georgia. Russian is more common among older people. The native language, Georgian, is a difficult language to learn. It's alphabet is unique and the language is distinct from any other major language.

Freedom:  High - Breaking from the confines of communism after the Soviet collapse, Georgia has become one of the freest developing countries in the world. It ranks near the top in economic freedom and ease of doing business, so property investment is pretty sound. Corruption is relatively low and continuing to fall. There is still progress to be made in personal freedom and civil liberties, but this is steadily improving as well. Georgia is a safe country for foreigners.

2. Botswana

Edited Photo. Source: Flickr - Athena Lao

Africa might be for the more adventurous among us, but among African nations Botswana is a clear outlier. Situated north of South Africa, Botswana is a landlocked and mostly arid country with lots of natural resources. It is Africa's oldest and most stable democracy and its economy has been performing well for decades now. Botswana is doing a lot of things right and the benefits are clear.

Income Tax:  Low - No tax on any overseas income. Low tax on local income.

Obtaining Residency:  Somewhat Difficult - Botswana offers an investor class residence permit to individuals who invest more than $100,000 USD in the country. The permit process is not very clear, but the government favours those with business experience and investors who employ Tswana people. Botswana is an attractive place to invest in Africa and property rights are quite well established. Unfortunately there is no visa class for self-sustaining individuals.

Climate:  Moderate - The climate is generally quite dry and hot with high temperatures averaging in the mid-30C range. It's bone dry in western Botswana and rainfall increases to the east. Much of the country is flat and rolling scrub land. In the north, Botswana has the Okavango delta region which attracts one of the largest concentrations of large wildlife in southern Africa.

Cost of Living:  Low - The cost of living is 50 - 60% cheaper than a large city in Canada. This varies as the cost of living drops outside of the capital, Gaborone.

English Speakers:  High - Being a former English colony, English is the official language of government and is widely spoken.

Freedom: Moderately High - Botswana is country with high levels of personal freedom and low levels of corruption. It is the easiest country for business in continental Africa; property rights are quite well enforced and the judiciary is independent. Botswana gets some points off for crime issues, but it is one of the safest countries in Africa.

3. Namibia

Edited Photo. Source: Flickr - DConvertini

Namibia, on the southwest coast of Africa, is another rapidly progressing African country. Since independence from South Africa, Namibia has done better than it's former colonizer. Crime is lower, regulations are better, and the economy is growing quickly.

Income Tax:  Low - No tax on any overseas income. Low tax on local income.

Obtaining Residency:  Moderate - Namibia offers a temporary residence permit for individuals who can demonstrate economic self-sustainability. It's not a difficult process, but must be renewed annually. Another option, similar to Botswana, Namibia's investor visa is based on business start-up and capital investment with an advantage for local hires. For this permit, investors should provide capital of approximately $150,000 USD into a Namibian company. It's relatively easy for foreigners to start Namibian corporations, but regulation and transparency reforms are not progressing as quickly as they should.

Climate:  Appealing - Namibia might be known for it's hot deserts and massive sand dunes, but the climate of it's largest cities is very pleasant. Windhoek, the capital and largest city, is located in the central highlands. Thanks to the altitude, temperatures don't exceed the mid-30C range and rarely fall below freezing. Windhoek receives over 3,500 sunshine hours and rainfall is quite low. On the coast, Walvis Bay is bone dry and sunny, but temperatures are very mild thanks to the cool ocean current.

Cost of Living:  Moderately Low - The cost of living in Namibia's cities is approximately 40% cheaper than a large city in Canada.

English Speakers:  Moderate - A reasonable number of locals in the larger cities can speak English. It is important to learn the local language, Afrikaans, to have a good experience. Afrikaans might be the easiest language for English speakers to learn, so it shouldn't be difficult to acquire over time with proper practice.

Freedom: Moderate - Namibia scores quite well in personal freedom, but the government and judiciary suffer from lack of transparency and effectiveness. Unfortunately business freedom scores have actually moved backwards in recent years as reforms got bogged down. While better than most other African countries, Namibia suffers from a crime problem which affects personal safety scores.

Have you considered moving overseas on a more permanent basis? What would be your priorities in choosing a place to live?

Comments & Questions

All comments are moderated before being posted for public viewing. Please don't send in multiple comments if yours doesn't appear right away. It can take up to 24 hours before comments are posted.

Comments containing links or "trolling" will not be posted. Comments with profane language or those which reveal personal information will be edited by moderator.