Offshore Asset Protection Trust Fairfax VA

Tax Filing Requirements for Small Business Owners in Low-Tax Countries

Individuals who run a vivid, dynamic small business or “side hustle” may not need to worry about any offshore asset protection structures usually more fitting for higher amounts and may also not need to even file income taxes in certain countries, either because the country has no personal income tax or because it offers a high tax-free income threshold. (Here we assume the person is not a U.S. citizen or subject to any country’s worldwide taxation rules, since U.S. citizens must file U.S. taxes on self-employment income over $400 regardless of where they live.) Below, we outline two categories of countries favorable to small earners: those with zero income tax, and those with generous tax-free allowances above the equivalent of $400 per year.

Countries with No Personal Income Tax (Zero-Tax Jurisdictions)

Some countries do not impose any personal income tax on their residents. In these places, individuals (including business owners) have no obligation to file or pay income tax on their earnings, no matter the amount. Examples include:

• Oil-Rich Gulf States: United Arab Emirates, Saudi Arabia, Kuwait, Qatar, Bahrain – These countries levy no income tax on individuals, thanks to revenues from oil/gas and other sources. An entrepreneur or salaried person in these nations does not file an income tax return at all, as personal income is not taxed.
• Caribbean & Island Nations: Bahamas, Bermuda, Cayman Islands, British Virgin Islands, Vanuatu, St. Kitts & Nevis, Antigua & Barbuda, etc. – Many small island states have zero income tax to attract residents and investors. For instance, an expat running a business in the Bahamas or Vanuatu would pay no income tax and file no personal tax returns.
• Other Notable Zero-Tax States: Monaco (no income tax for residents), Brunei (no personal income tax), and even Somalia or Western Sahara (which currently effectively levy no income tax) are also in the no-tax club. In all such jurisdictions, any amount of personal/business income is tax-free, eliminating the filing requirement entirely.

(Do note that even in zero-tax countries, businesses might still handle other taxes like VAT, and foreign citizens must ensure they are not taxed by their home country. But purely locally, no income tax means no annual tax filing for individuals.)

Countries with High Tax-Free Income Thresholds

Most countries that do tax income still provide a basic exemption or allowance – a level of income not subject to tax. In many cases, this tax-free threshold is well above $400 per year, meaning locals with only a small business income can earn more than in the U.S. before needing to file or pay taxes. Typically, if your income is below the allowance, you owe no tax and often have no legal requirement to file a return. For example:

• United Kingdom: The UK has a personal tax-free allowance of £12,570 (around $16,000) – income below this is 0% taxed. Moreover, the UK specifically exempts small side-business income: if your self-employed “trading” income is ≤ £1,000 per year, you do not even need to register or file a tax return for it. (In other words, a Brit with a tiny side gig under £1k can ignore HMRC filings, as that income is fully covered by the trading allowance.)
• Germany: Germany provides a generous basic allowance (Grundfreibetrag) – roughly €10,000–€11,600 of income is tax-free. For example, in recent years about €11,604/year is 0% taxed. A German sole trader earning only, say, €5,000 would owe no income tax and generally would not be required to file a tax return due to being under the filing threshold (unless they had other income).
• Canada: Canada’s federal Basic Personal Amount is around CAD $15,000 (approx. $11,000 USD) in 2025. This means a Canadian earning under about $16k pays no federal tax. In fact, if an individual has no tax owing (income below the allowance and no withheld amounts), they are not obligated to file a return (though many file anyway to claim benefits).
• India: India uses slabs with a sizeable 0% bracket. Under the old regime, income up to ₹250,000 (around $3,000) is tax-exempt. Under a newer optional tax regime, the 0% band is even higher (up to ₹500,000, ~$6,000). Small business owners in India with earnings below these levels owe no tax and need not file.
• Philippines: The Philippines’ tax system exempts annual income up to ₱250,000 (about $4,200) – that portion is taxed at 0%. Only once income exceeds ₱250k does a person incur tax (15% on the next band, etc.). A Filipino with a micro-business making, say, ₱200k a year would be below the taxable threshold and not required to file/pay income tax.
• Greece: Greece has a basic income allowance (for salaried individuals) such that income under ~€8,633 is not taxed at all. Small earners under this amount have no tax liability. (Greece does require filing in some cases, but if you have only very low income below the threshold, there is effectively no tax due and the filing may be waived.)
• Bangladesh: As a developing country example, Bangladesh’s tax-free limit is Tk 350,000 (around $3,200) for general taxpayers. Income below this incurs 0% tax. A local entrepreneur earning the equivalent of a few hundred dollars would be under the limit and not obliged to file a return.

As these examples show, a $400 annual income is extremely low relative to most countries’ tax thresholds. In many nations, one can earn several thousand USD a year from a small business before any tax is due or any filing requirement kicks in. The United States (which taxes self-employment income above $400) is an outlier with such a tiny threshold. By contrast, most other jurisdictions either don’t tax small incomes at all or only begin to tax (and require returns) at much higher income levels (often in the thousands or tens of thousands of dollars).

Note on Worldwide Tax Obligations

It’s important to remember that the above assumes the individual is only subject to the local country’s tax laws. Some countries (notably the United States, and a few others) tax their citizens’ worldwide income even if they reside or do business abroad. For example, a U.S. citizen living in a no-tax country like UAE still must report to the IRS if they earn over $400 from self-employment. However, if you are not a citizen of such a country, then only the local rules apply – meaning in a zero-tax country you file nothing, and in a high-allowance country you only file/pay once your income rises above the exempt amount. Always check both the local laws and any home-country tax rules, but generally many countries allow small business owners to earn well above $400/year with no tax filings required.

In true tax havens like the UAE and others, individuals (including small business owners and freelancers) generally do not have to file personal income tax returns at all, because:

There is no personal income tax system to begin with.
Therefore, no income tax filings are required — at any income level.

Countries Where Small Business Owners Don’t File Income Tax at All

Here are some popular zero-income-tax jurisdictions where both salaried individuals and small business owners do not file any income tax returns, regardless of income amount:

🇦🇪 United Arab Emirates (UAE)

• No personal income tax, including for freelancers, sole proprietors, and professionals.
• Businesses may be subject to corporate tax (9%) if annual profits exceed AED 375,000 (~$102,000 USD), but this applies to entities, not individuals operating below that threshold.
• No personal filing obligation — even if you earn millions.

🇧🇸 Bahamas

• No personal income tax, capital gains tax, or inheritance tax.
• Self-employed and business owners do not file personal income taxes.
• Only VAT (12%) and some license fees may apply for businesses — not personal earnings.

🇧🇲 Bermuda

• No personal income tax.
• Government revenue comes from payroll tax (paid by employers), customs, and consumption taxes.
• Sole proprietors do not file income tax returns.

🇻🇺 Vanuatu

• No personal income tax or corporate income tax.
• Small business owners do not file or pay income tax at all.

🇰🇼 Kuwait, 🇶🇦 Qatar, 🇸🇦 Saudi Arabia

• No personal income tax.
• Citizens and residents do not file returns for any kind of earned income.
• Some countries may have corporate tax or Zakat obligations for registered businesses, but individuals remain exempt.

🇲🇨 Monaco

• No personal income tax for residents (except French nationals).
• Business income may be taxed if more than 25% is generated outside Monaco — but for local freelancers and service providers, no personal filing is required.

Key Clarifications

• No income tax means no filing obligation at all — regardless of income source or amount.
• In some cases, if you register a formal business entity, license fees, VAT, or corporate taxes may apply — but those are not personal income tax filings.
• These countries are ideal for digital nomads, consultants, small service businesses, and wealthy individuals seeking zero-tax residency.

U.S. Citizens: Important Caveat

As a US citizen you may want to caveat emptor on offshore asset protection because even if you live in one of these countries, as a U.S. citizen, you must still:

• File Form 1040 annually
• Report worldwide income, even if tax is 0 where you live
• File Schedule C and Schedule SE if self-employed with ≥ $400 income
• Possibly claim the Foreign Earned Income Exclusion (Form 2555) or Foreign Tax Credit

But for non-U.S. citizens, these countries truly offer a no-tax, no-filing lifestyle — even for small business owners.

The problem is, you are going to be a US resident and citizen. If you make any money doing this, you do have to declare the money. In some industries, sectors, and situations  you may be overpaying tax by a lot and you are missing out on a lot of perfectly legal options to pay way less in taxes with the right strategies. Well before “making millions” if you are concerned about this, you are going to want to talk to an experienced asset protection lawyer in Fairfax VA or in the USA. Contact us and we can see if we could refer you to someone who can make a viable strategy for you and can be worthy to earn your trust starting with small wins and low fees first and going from there. If you are a firm providing these services and you think you could be trusted to work with clients like this contact Dynamics Edge for information on our customized Dynamics 365 CRM for Asset Protection services platform consulting options and offerings for July 2025, August 2025 and possibly throughout 2025.