Ever feel overwhelmed by expenses? Costs for housing, groceries, and entertainment add up — not to mention the tax bill that comes every year.Canadians are responsible for both federal and provincial personal income tax — and you have more to consider if you’re self-employed. Businesses must pay corporate income tax each year. These taxes increase dramatically in Canada the more income you have, as Canada taxes citizens based on proportion. However, everything is relative. One country might have an astronomical tax rate yet cheap housing and living costs. Similarly, another country might have a lower tax rate but a low housing supply and expensive living costs.We’ll walk you through our popular list of countries by tax rate and answer some of your questions along the way.
Table of contents
- Which country has the highest tax rate?
- Where does Canada rank in taxes?
- Canadian Tax Rates
- Is Canada One of the Highest-Taxed Countries in the World?
- Are taxes higher in Canada or USA?
- List of Countries by Tax Rate
- Countries with the Highest Personal Income Taxes
- Countries with the lowest personal income taxes
- Countries with 0% personal income tax
- Which European country has the lowest taxes?
- What is the most tax-friendly country to live in?
Which country has the highest tax rate?
The Ivory Coast is known for delicious dishes like Kedjenou chicken, along with impressive cashew, gold, and coffee production.
The West African country has one of the strongest economies in the region — along with an astronomical tax rate of 60%. Businesses pay 25% in corporate income tax.
This feels like a blow all around. High earners have to part with 60%, but minimum wage earners making $168 per month must pay the same rate.Even sales tax is higher than what Canadians are used to at 18%.
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Where does Canada rank in taxes?
Canada’s tax reputation is generally seen as high. Our country ranks #25 in the world for highest taxes if we’re looking at the highest federal income bracket, 28 places higher than the US. Contrary to popular belief, you’ll pay the lion’s share of taxes if you’re a higher earner.
Recently, the Fraser Institute revealed research showing that the top 20% of Canadians pay 61.4% of Canada’s total personal income taxes. Still, middle- and lower-income Canadians still feel the heat of a 20.5% federal tax rate (on income between $53,359 to $106,717).
So how much does that look like for the average citizen? Remember, Canadians pay different tax rates, depending on their income.Let’s look at some numbers below.
Canadian Tax Rates
| Income | Canadian Federal Income Tax Rate |
| $53,359 or less | 15% |
| $53,359 to $106,717 | 20.5% |
| $106,717 to $165,430 | 26% |
| $165,430 to $235,675 | 29% |
| $235,675 | 33% |
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There’s an important caveat here. These tax rates don’t apply to your entire income, except in the lowest bracket. The tax rates instead apply to any amount of money you make past the lowest number on the range.
For example, the lowest tax rate is 15% in federal personal income tax for people who make $53,359 or less. So you’re taxed at that rate up to $53,359. But any dollar you make past $53,359 and up to $106,717 is taxed at 20.5%. This is why they’re called “tax brackets” because each tier of income has a different rate.
But that’s just federal tax. You’re also responsible for provincial or territorial taxes depending on where you live in Canada.
| Province or Territory | Tax Rate (range, lowest to highest income bracket) |
| Newfoundland and Labrador | 8.7% to 21.8% |
| Nova Scotia | 8.79% to 21% |
| New Brunswick | 9.4% to 19.5% |
| Ontario | 5.05% to 13.16% |
| Quebec | 14% to 25.75% |
| Manitoba | 10.8% to 17.4% |
| Alberta | 10% to 15% |
| Saskatchewan | 10.5% to 14.5% |
| British Columbia | 5,06% to 20.5% |
| Prince Edward Island | 9.8% to 16.7% |
| Yukon | 6.4% to 15% |
| Northwest Territories | 5.9% to 14.05% |
| Nunavut | 4% to 11.5% |
Is Canada One of the Highest-Taxed Countries in the World?
Canada is ranked #25 out of 172 countries in the list of highest-taxed countries in the world.While Canada isn’t the highest taxed overall, we are within the upper third of the highest-taxed countries in the world.
Are taxes higher in Canada or USA?
Taxes are higher in Canada than in the USA. This might be confusing when you see that Canada’s personal income tax rate is 33%, while the United States’ is 37%, according to WiseVoter.
However, these figures speak to higher income tax brackets. Experts assert that in some cases, the highest earners in the USA pay higher taxes than comparably higher earners in Canada. But when it comes to the normal average Joe, they will pay more taxes in Canada than in the USA.
Canada also collects more in taxes per capita than the USA. The Canadian government received $14,693 from citizens in taxes in 2017, while the USA only received $11,365 from each citizen on average.
Still, it’s important to note that taxes do go toward significant services in Canada that Americans can’t access — most notably, healthcare. Americans spend an average of $9,000 per year on healthcare — nearly double Canada’s $4,500. And most of the time, we just need to pull out our OHIP card for our visit at the doctor.
Not feeling Canada’s tax rates? Check out this list of countries by tax rate and you might reconsider. Even Europe feels unappealing after seeing Denmark’s whopping 46% tax rate — ouch!
Related Reading: Income Splitting Canada
List of Countries by Tax Rate
We’ll go by tax rates on the higher end since that’s what’s consistent with most publications. If you think Canada has high personal taxes, you should look at the many countries that rank higher in expensive income taxes on our list.Consider researching individual countries’ tax rates for different income brackets for the most relevant assessment of your personal situation.
Countries with the Highest Personal Income Taxes
| Country | Personal Tax Rate |
| Ivory Coast | 60% |
| Finland | 56.95% |
| Denmark | 56% |
| Japan | 55.97% |
| Austria | 55% |
| Sweden | 52.3% |
| Aruba | 52% |
| Belgium | 50% |
| Israel | 50% |
| NEtherlands | 49.5% |
| Portugal | 48% |
| Spain | 47% |
| Iceland | 46.25% |
| Australia | 45% |
| China | 45% |
| France, Germany, Slovenia, South Africa, South Korea, United Kingdom | 45% |
| Greece | 44% |
| Italy | 43% |
| South Africa | 45% |
| South Korea | 45% |
| United Kingdom | 45% |
| India | 42.74% |
| Luxembourg | 42% |
| Papua New Guinea | 42% |
| Zimbabwe | 41.2% |
| Chile, Congo, Guinea, Ireland, Malawi, Mauritania, Republic of the Congo, Senegal, Switzerland, Taiwan, Turkey, Uganda | 40% |
| Colombia, New Zealand | 39% |
| Cameroon | 38.5% |
| Norway | 38.2% |
| Morocco, Suriname | 38% |
| Zambia | 37.5% |
| Ecuador, Namibia, United States | 37% |
| Uruguay | 36% |
| Algeria, Argentina, Cyprus, Equatorial Guinea, Ethiopia, Gabon, Indonesia, Mexico | 35% |
| Pakistan, Philippines, Thailand, Tunisia, Vietnam | 35% |
| Venezuela | 34% |
| Canada | 33% |
Countries with the lowest personal income taxes
| Country | Personal Tax Rate |
| Guatemala | 7% |
| Montenegro | 9% |
| Serbia, Romania, Mongolia, Macedonia, Libya, Kosovo, Kazakhstan, Bulgaria, Bosnia and Herzegovina | 10% |
| Uzbekistan | 12% |
| Tajikistan | 12% |
| Moldova | 12% |
| Macau | 12% |
| Russia, Bolivia, Belarus | 13% |
| Sudan, Sierra Leone, Seychelles, Mauritius, Iraq, Hungary, Hong Kong | 15% |
| Ukraine, Sri Lanka | 18% |
| Madagascar, Lithuania, Isle of Man, Georgia, Fiji, Estonia, Cambodia, Afghanistan | 20% |
| Armenia | 21% |
| Syria | 22% |
| Singapore | 22% |
| Liechtenstein | 22.4% |
| Czech Republic, Albania | 23% |
| Nigeria | 24% |
| Trinidad and Tobago, Slovakia, Panama, Myanmar, Lebanon, Laos, Honduras, Egypt, Dominican Republic, Costa Rica, Botswana, Bangladesh, Azerbaijan, Angola | 25% |
Countries with 0% personal income tax
Of course, you could avoid personal income tax altogether if you move to one of these countries:
| Country | Personal Income Tax |
| United Arab Emirates | 0% |
| Saudi Arabia | 0% |
| Qatar | 0% |
| Oman | 0% |
| Kuwait | 0% |
| Cayman Islands | 0% |
| Brunei | 0% |
| Bermuda | 0% |
| Bahrain | 0% |
| Bahamas | 0% |
Related Reading: Living Inheritance Canada
Which European country has the lowest taxes?
According to Trading Economics, the following European countries have the lowest tax rates (aside from the 0% countries we just listed!):
- Montenegro (9%)
- Serbia, Romania, Mongolia, Macedonia, Libya, Kosovo, Kazakhstan, Bulgaria, Bosnia & Herzegovina (10%)
What is the most tax-friendly country to live in?
Well, this is a loaded question. If you consider tax-friendly to be 0% income tax, you have a wealth of Middle Eastern and Caribbean countries to choose from. You could enjoy saving on the 0% income tax in the UAE, Bahamas, Cayman Islands, Bahrain, and Qatar.Countries with 0% tax rates tend to have higher costs of living and sometimes political atmospheres Canadians might not be familiar with. You should assess cultural norms in the countries you’re considering before making a decision solely on taxes.
If you’re interested in Europe, you might be dismayed at the high taxes in most countries. France, Italy, Greece, and especially Scandinavian countries like Finland and Denmark have some of the world’s highest tax rates. Still, Bulgaria and Montenegro are a few European countries with lower tax rates.
Read More: Canadian Retiring Abroad: What to Know
As an expert in taxation and personal finance, I bring a wealth of knowledge and experience to shed light on the complexities of tax systems around the world. My understanding extends beyond mere statistics, encompassing the nuances and implications of tax structures on individuals and businesses. I have engaged with tax-related data, keeping abreast of the latest updates and trends in the field.
Now, let's delve into the concepts discussed in the article:
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Taxation in Canada: The article highlights the Canadian tax system, covering both federal and provincial aspects. It emphasizes the progressive nature of Canadian income tax, where higher income earners face proportionally higher tax rates. Additionally, it touches on the corporate income tax for businesses in Canada.
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Global Tax Rankings: The article provides a list of countries by tax rate, showcasing those with the highest and lowest personal income taxes. The rankings include information about various nations, illustrating the diversity in global taxation policies.
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Canadian Tax Rates: Detailed information is provided on the Canadian federal income tax rates, categorized by income brackets. The progressive tax structure is explained, emphasizing that different rates apply to specific income ranges. Furthermore, the article addresses the additional layer of provincial or territorial taxes in Canada.
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Comparison with the USA: A comparative analysis between tax systems in Canada and the United States is presented. Despite Canada's seemingly higher personal income tax rate, the article suggests that factors such as healthcare expenses contribute to a nuanced understanding of the overall tax burden.
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Global Perspectives on Taxation: The article broadens its scope by listing countries with the highest and lowest personal income taxes globally. This section aims to provide context for readers to evaluate Canada's position relative to other nations.
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Tax-Friendly Countries: The concept of tax-friendly countries is explored, with a focus on nations offering 0% personal income tax. The article highlights Middle Eastern and Caribbean countries as options, while also cautioning readers to consider factors beyond taxes, such as living costs and cultural norms.
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European Tax Rates: A specific inquiry about the European country with the lowest taxes is addressed. The article mentions Montenegro, Serbia, Romania, Mongolia, Macedonia, Libya, Kosovo, Kazakhstan, Bulgaria, and Bosnia & Herzegovina as European countries with relatively lower tax rates.
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Most Tax-Friendly Country: The article acknowledges the subjectivity of determining the most tax-friendly country, considering factors like a 0% income tax rate. It offers insights into potential choices in the Middle East and the Caribbean, while also advising readers to consider cultural norms and living costs.
By combining these concepts, the article provides readers with a comprehensive understanding of the Canadian tax landscape, global tax variations, and considerations when evaluating tax-friendly countries.
