Moving abroad? 8 countries with the highest income taxes in the world

Dubai: When considering immigration and residency abroad, taxes can make or break decisions. Here we look at some countries with comparatively higher taxes. We are focusing on primary personal income taxes only – there may be additional taxes on capital gains and investment income.

CUMULATIVE TAXES: The rates mentioned are marginal taxes and not percentages of total income – cumulative tax payable is much lower. For instance, even if the highest tax rate for the upper income range is 50 per cent, the total payable tax will be much lower.

DENMARK taxes residents on worldwide income (unless there is a tax treaty) with national income tax, municipal tax, labour market tax, and church tax. The maximum marginal tax percentage allowed to be levied is 52.07 per cent – but net tax payable might be lower. In Denmark, a single taxpayer earning an annual income of DKK600,000 (Dh26,500 a month) could pay DKK230,332 (more than Dh10,100 a month) in taxes, and more than someone with a spouse/partner and children.

In CANADA, the highest applicable income tax rate on the federal level is 33 per cent while the lowest applicable is 15 per cent. In addition to federal income tax, residents must also pay provincial tax or territorial tax – the top rate could be as high as 21.8 per cent. Quebec residents pay 25.7 per cent but there are some tax exemptions on the federal level for them.

BELGIUM taxes all residents on their worldwide income, irrespective of their nationality. Non-residents only have to pay taxes on income earned inside Belgium. Residents falling in the highest income bracket – 46,440 euros (Dh183,785) and above– are charged 50 per cent in taxes on the excess income. Other than this, communal taxes can range up to 9 per cent.

For UNITED STATES OF AMERICA residents, the top income tax rate for 2023 is 37 per cent on the federal level on their worldwide income. This is in addition to state tax or local tax, which may vary, based on residence.

In FINLAND, the highest tax bracket levied for Finnish residents is 44 per cent, not including municipality tax, church tax and Public broadcasting tax – which adds up to an average of 9-10 per cent – going well over 50 per cent in marginal tax rates. Non-residents pay 35 per cent on employment income unless there is a lower rate specified in relevant tax treaties.

UNITED KINDOM residents domiciled in the country have to pay taxes on worldwide income and capital gains. In the UK, the tax charged is based on brackets of income starting from 0 to GBP 37,700, from GBP 37,701 to GBP 125,140, and lastly from GBP 125,141 (Dh48,000 a month) and over – at 20 per cent, 40 per cent and 45 per cent respectively. UK residents who not domiciled pay taxes only on funds remitted to and used in the UK.

Residents in JAPAN could pay as high as 45 per cent on the highest income bracket of over 40 million yen (over Dh1 million a year). Tax residents can make ‘earned’ deductions in each bracket before tax is applied. Non-residents get no deductions but are charged 20.42 per cent on total income.

Non-residents in PORTUGAL must pay a flat rate of 25 per cent in income tax. However, Portugal’s resident tax rate for the highest income bracket is 48 per cent on their worldwide income – the highest we saw in our research. And, if residents earn more than 80,000 euros, they have to pay an additional ‘solidarity tax’ of 2.5 to 5 per cent.

UAE is one of the few countries in the world where residents enjoy 0 per cent tax on personal income, and among the world’s lowest corporate tax rates, making it attractive for skilled individuals and global investments.

**These taxes are also subject to changes based on relevant tax treaties between nations. Income and taxes converted to Dh/month for reference only. All data from PWC Tax Summaries, as updated in 2023