The United Arab Emirates has been introduced as the best tax jurisdiction in the world for global citizens. This ranking was conducted based on a new index from 48 countries by a consultancy firm specializing in residency and citizenship planning.
Evaluation Indicators
The report titled "Tax Optimization for Global Citizens" was prepared by the research unit of this firm. The report evaluated jurisdictions based on 11 indicators across three main pillars: tax burden, tax structure, and investment migration. These pillars account for 42.5%, 42.5%, and 15% of the evaluation weight, respectively.
The United Arab Emirates has achieved the top position in this ranking with a zero personal income tax rate, a 5% value-added tax, and no exit fees for departing residents.
Quality of Life and Services
Global think tanks have also ranked the UAE highly in terms of quality of life, healthcare services, safety, and security. Antigua and Barbuda, Paraguay, Hong Kong, and the Bahamas follow in the rankings. Malta and Cyprus are the only two European jurisdictions that have made it into the top ten countries.
The main findings of this study indicate that the tax rate of a jurisdiction and the structure of its tax system are largely independent of each other. For example, Uruguay, which has a 36% tax rate, has achieved the strongest score for tax structure in this sample and is ranked twelfth overall.
The report also identifies two mechanisms that contribute to a strong score in tax structure: a tax base that completely exempts foreign income, or taxing only based on remittances.
According to one expert, countries that have established a good balance between taxation and quality of life have not achieved this success through a tax-free model, but rather by taxing based on territory or using preferential tax regimes.
The report shows that jurisdictions with the lowest tax burdens typically also have the lowest rankings in terms of quality of life. Of the 48 jurisdictions examined, 31 have no exit taxes, including all countries in Latin America and the Caribbean.
The United States has been identified as having the highest tax burden in this sample and also the strictest exit conditions.
The report concludes that no jurisdiction can be suitable for every type of global citizen. Entrepreneurs approaching cash events should focus on capital gains tax and exit costs, while retirees should concentrate on inheritance issues, healthcare, and consumption taxes.
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