Top 7 Countries With the Lowest Corporate Tax Rates in 2025

If you’re running a company in a high-tax country, it’s natural (and common) to look at “low-tax” jurisdictions to reduce your taxes. But low taxes alone are not enough to run a real business or save on costs in the long run.

Unlike many guides you’ll find today, we won’t simply rank countries by the lowest corporate tax rate and ignore everything else. Instead, we'll focus on jurisdictions where you can legally reduce taxes and build a credible, functional business.

After all, what’s the point of paying no tax if you can’t open a bank account or actually operate your business? If your goal is long-term, cross-border growth with fewer tax burdens, without sacrificing stability or legitimacy, this article is for you.

Hong Kong operates under a territorial tax system, meaning only profits sourced from within Hong Kong are subject to taxation, while the foreign-sourced income is exempted. Its two-tier profits tax regime also provides a lower rate on the first portion of profit. There is no capital gains tax, no tax on dividends, and generally no withholding tax on interest.

Combined with its reputation as a modern financial hub and its strategic proximity to one of the world’s largest markets and supply chains—China—Hong Kong is an attractive base for business.

You can register a company fully online without needing a local director, and the process usually takes just a few working days. This makes Hong Kong widely regarded as a straightforward and reliable place for international entrepreneurs to register a company.

• Up to 300% deduction on the first HKD 2 million of eligible R&D expenses, and 200% thereafter. Useful for tech and innovation companies.
• Depreciation relief for equipment and machinery. Helpful for businesses with large assets.
• Businesses can carry forward tax losses with no time limit to offset future profits. This supports early-stage startups.
• Special deductions apply to certain costs, such as environmental and green equipment, machinery or plant used for any manufacturing process, IP registration and acquisition, spectrum fees, etc.
• Hong Kong tax residents can claim foreign tax credits to avoid paying tax twice on the same income. Credits are available when the income is taxed in a country that has a tax agreement with Hong Kong, for eligible foreign-sourced income, or for profits of a company that moves its incorporation to Hong Kong. 

If you’re building a trading or digital business in the EU, Ireland offers a flexible tax and legal environment to do so efficiently. The country applies a 12.5% corporate tax rate on most trading income and supports innovation through R&D credits and reduced tax on qualifying patents.

You can register a company online with no minimum capital. Just note that you’ll need at least one EEA-resident director.

• 30% credit on eligible R&D spending, yielding a total effective tax deduction of 42.5%
• 10% tax rate on profits arising from qualifying assets and patents 
• A 3-year corporation tax holiday for qualifying start-ups (trade up until 2026)
• Trading losses can be carried forward indefinitely to offset future profits from the same trade. This helps startups offset future profits if they incur losses in the early years.
• Manage non-Irish investment funds without creating a taxable presence in Ireland
• Regulatory and tax framework which enables efficient redomiciliation of investment funds from traditional offshore centers
• Access to foreign tax credits through Ireland’s broad network of tax treaties, reducing the risk of double taxation on international income

Singapore offers a flat corporate tax rate and generous exemptions for startups and SMEs. Foreign income may also be exempt if not remitted to Singapore, meaning companies could effectively pay even less than the headline rate. On top of that, you won’t pay tax on capital gains.

The country also has a global reputation as a trusted business hub, offering strong IP protection and transparent regulations. This creates an environment where companies can operate with confidence and innovate freely. 

A resident director is required for company setup, but the rest of the setup is quick and cost-effective, making it easy to launch and grow across ASEAN.

• Up to 75% tax exemption on the first SGD 100,000 and 50% on the next SGD 100,000 for start-ups in their first 3 years.
• Partial exemption after startup phase, 75% on the first SGD 10,000, 50% on the next SGD 190,000.
• Up to 400% deduction on the first SGD 400,000 spent on R&D in Singapore from 2024 to 2028.
• Tax depreciation on approved machinery and equipment costs
• Up to 100% depreciation on the cost of computers, robots, generators, and automation tools.
• Up to  200% tax deduction on up to SGD 100,000 spent to register IP, and another 200% on up to SGD 100,000 spent to license IP, from 2019 to 2028.
• Business losses and unused depreciation can be carried forward with no time limit if the company ownership and business activities stay mostly the same.

The UAE offers 0% corporate tax on income earned in Free Zones and on taxable income up to AED 375,000. A 9% corporate tax applies to income exceeding that threshold, as well as in the mainland and for non-qualifying income.

Full foreign ownership in a company is permitted, and most Free Zones do not require a local director. Depending on the Free Zone, setup costs vary, but the overall process is efficient thanks to digital government services. The UAE’s strategic location—serving as a major global hub connecting the Middle East, Europe, Asia, and Africa—adds significant logistical and commercial advantages.

*To qualify for 0%, Free Zone companies must meet rules on real operations, approved business activities, and audited accounts.

• Tax relief for SMEs with revenue under AED 3 million. Available until 31 December 2026 with easier reporting.
• Tax relief on eligible asset or liability transfers between group companies with 75% shared ownership and the same accounting rules.
• Foreign tax credit available for tax paid overseas, up to the UAE tax due. Extra credit can’t be carried forward.

Hungary offers a 9% flat corporate tax rate, the lowest in the EU.  A municipal local tax of up to 2% may apply depending on location, yet even with that, Hungary remains one of the EU’s lowest-tax jurisdictions.

It’s especially attractive for SMEs, trading companies, and holding structures, thanks to 0% withholding tax on corporate dividends and tax-free capital gains on qualifying shareholdings. The country also benefits from a strong banking system and EU-wide tax treaties.

Companies can be set up online in a few days with no local shareholder or director required. While Hungary does not impose formal substance rules, having real operations may support access to tax treaty benefits.

• Assets acquired can be depreciated at 50% per year.
• Up to 300% of direct R&D costs is deductible (up to HUF 150 million)when the research is conducted with a higher-education institution.
• Unilateral foreign tax credits are available for income taxes paid abroad.
• Tax holidays may be granted for certain developments and for SMEs.
• Losses can be carried forward but may offset only up to 50% of the tax base before applying carried-forward losses.

Corporate tax in Estonia is paid only when profits are distributed, allowing companies to reinvest earnings tax-free. This structure makes Estonia a strong choice for growth-focused businesses and founders with long-term plans.

Estonia also stands out for its straightforward compliance. There are no local income taxes or complex deductions to track. Everything is centralised and digital.

Company setup is fast and fully online through Estonia’s e-Residency programme. No local shareholder or director is required. However, a local contact person must be appointed, which can be arranged through a service provider. Accessing an Estonian bank account may require local presence, so most businesses use EU-based fintech platforms to open accounts remotely.

Corporate profits are only taxed when distributed. Because of that, things like tax depreciation and tax loss carryforward technically do not apply in the same way as in many other countries. Instead, Estonia provides other benefits, such as:

• Other types of taxes paid are deductible for corporate income tax. 
• Payments to foreign affiliates are deductible if they are for real business purposes, legitimate, and properly documented. However, even if deductible, some payments may still face withholding taxes. 

A qualifying company in the Qatar Free Zones or the Qatar Science and Technology Park (QSTP) enjoys full foreign ownership and a 20-year renewable 0% tax holiday. Outside the Free Zones, 100% foreign ownership is still possible in many sectors, subject to approval, and a flat 10% corporate tax applies on income sourced within the country, which is still low.

Companies entirely owned by Qatari or GCC nationals can be exempt from certain taxation, whereas oil and gas operations are subject to much higher rates. Establishing a business there is feasible and increasingly straightforward thanks to government initiatives in specific sectors.

• 20 years of tax holiday for businesses in Qatar Free Zones
• Foreign tax paid outside Qatar can be deducted from Qatar tax liability if the related income is taxable in Qatar. 
• Certain projects deemed strategically important to Qatar’s economy may qualify for a tax exemption of 5-10  years.
• Tax-free setup for R&D-driven companies in science and tech sectors. However, they must still file tax returns and apply withholding tax on payments to non-residents.
• Losses from the sale of assets are deductible.
• Dividends are not taxable if received from profits already taxed in Qatar or from a Qatar tax-exempt company. However, dividends received from a foreign entity that is not linked to a Qatari entity’s permanent establishment are taxable.

Looking for the lowest tax? Zero should be the best, right? Not always. Some of the most well-known tax haven countries do offer 0% corporate tax, but in practice, not every 0% jurisdiction is an automatic win. Many come with trade-offs. 

That’s why it’s important to weigh both the benefits and limitations. Here are examples of some of the most well-known countries with 0% corporate tax and the considerations to keep in mind for each.

• Anguilla: 0% corporate tax for all companies, but it appears on the EU non-cooperative list, which makes business with the EU and many other partners more difficult.
• Bahrain: 0% corporate tax, but they have regulatory complexity and sensitivity to oil price swings.
• Seychelles: 0% corporate tax, but reputation risks may make it harder to open a bank account overseas and engage in active business activity.
• Bahamas: 0%  corporate tax, but with bureaucratic hurdles and some restrictions on retail and wholesale operations.

Low or zero corporate tax may sound ideal, but your business might not qualify for these tax-efficient benefits without an “economic substance”. Substance refers to the real activity and presence of a company in a jurisdiction. Authorities enforce these rules to ensure a company isn’t a mere “shell,” whether it’s earning offshore or onshore. These rules are enforced by local governments and reflect international standards set by the EU and OECD.

Typical substance requirements may include:

• Physical office space or a registered local address
• Core income-generating activities carried out in a particular jurisdiction
• Local employees or directors with relevant expertise
• Board meetings and company records are maintained locally
• Submission of annual substance compliance reports

Failing to meet substance rules can lead to serious consequences, including:

• Loss of tax exemption or treaty protection
• Increased scrutiny from foreign tax authorities
• Reputational damage, financial penalties, or enforcement actions.

A low corporate income tax rate is a good starting point. But if you can’t open a bank account, hire people, or rely on stable rules, the “cheapest” jurisdiction can become the most expensive mistake.

Use this three-pillar framework to compare low-tax countries beyond just the headline rate.

Not all low-tax countries are treated equally. Some 0% jurisdictions make it extremely difficult to trade internationally because of blacklist risks, EU scrutiny, or banking pushback.

What to check

• Is the country on any OECD/EU grey or black lists?
• Do international banks commonly reject companies from that jurisdiction?
• How stable and predictable is the legal/tax environment?

Why it matters

A rock-bottom tax rate is pointless if clients, suppliers, payment providers, or banks see your company as high-risk.

Countries like Hong Kong, Singapore, Ireland, Hungary, and the UAE score well here because they offer low tax + strong reputations.

Many low-tax countries fail at the most basic operational step: opening a bank account.

What to check

• How easy is it to open a business bank account as a foreigner?
• Can setup be done online, or do you need to visit in person?
• Are substance requirements (local director, office, filings) realistic for you?
• Can you maintain the structure long-term without friction?

Why it matters

Without banking access, you don’t have a business — just a company certificate.
This is where “paper” tax havens break down: they offer low rates but fail on usability.

Countries like Hong Kong, Singapore, the UAE (Free Zones), and Estonia offer realistic, foreign-friendly banking and setup paths, which is why they dominate low-tax lists.

Low corporate tax doesn’t automatically mean low effective tax.
The real question is how much tax you’ll pay after considering treaties, exemptions, offshore rules, and compliance requirements.

What to check

• Does the country have useful tax treaties that prevent double taxation?
• Does the low-tax rate apply to your income type (e.g., offshore income, distributed profits, qualifying free zone income)?
• Are there hidden costs such as audits, local filings, or mandated presence?
• Are there valuable incentives for your industry (tech, IP, R&D)?

Why it matters

Two countries may have similar headline tax rates but very different real tax outcomes once exemptions, remittance rules, or substance requirements apply.

This is why Hong Kong (territorial tax), Estonia (tax only on distributed profits), Singapore (startup exemptions), and the UAE (Free Zone regime) remain popular: they offer low statutory tax + strong treaty networks + clear rules.

A country only works as a low-tax base if it passes all three tests:

• ✔ Legitimate and internationally accepted
• ✔ You can actually open and use a bank account
• ✔ Your effective tax stays low after compliance

If any pillar fails, the low-tax advantage collapses.

Picking the right low-tax country is about more than just saving on corporate tax. It should also support how you operate, from company setup to banking and long-term growth.

Use this guide as a starting point to compare practical benefits across jurisdictions. When you find a location that matches your business goals, it becomes easier to grow with fewer obstacles.