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Countries With Zero Income Taxes


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With no personal income tax, Bahrain relies on output from the Abu Safa oilfield, which is shared with Saudi Arabia, for about 70 percent of its budget revenue.

For social security benefits, citizens contribute 7 percent of their total income to the government, while expatriates pay 1 percent. Employers must also make a contribution of 12 percent of a citizen's income for social insurance, and pay 3 percent for expatriate employees. Other indirect taxes include a stamp duty of up to 3 percent of the value of the property on real estate transfers. Expatriates also have to pay a 10 percent municipal tax for renting a home in the Persian Gulf state.

Despite its oil wealth, the Bahrain government's soaring spending on wages and other social measures in order to soothe social tensions has raised pressure on the country's public finances, which depends on hydrocarbons for about 88 percent of income. The government aims to cut spending by 6 percent in 2013 to curb its deficit to just over 6 percent of GDP this year, Reuters reported.

Pictured: The Manama Souk, Bahrain.

Photo: JD Dallet | Getty Images