Territorial-tax countries for expats
A territorial country taxes only income sourced inside its borders and ignores income earned abroad — so a foreign pension, foreign dividends and offshore income are typically not taxed locally. Classic examples are Panama, Costa Rica, Georgia, Malaysia, Singapore and Hong Kong. A related remittance basis (Malta, Ireland, and the UK's new 4-year regime) taxes foreign income only if you bring it in. The table lists every such destination we cover. Headline rules, 2026; not tax advice.
Source: PwC Worldwide Tax Summaries. Data as of June 2026.
Territorial and remittance-basis destinations (22)
| Country | Tax basis | Top income tax (local) | Foreign pension |
|---|---|---|---|
| Bahrain | Territorial | 0% (no personal income tax) | Not taxed — no PIT regime in Bahrain |
| Belize | Territorial | 25% | Not taxed — foreign-source; fully exempt for QRP holders |
| Bermuda | Territorial | 0% (no personal income tax) | Not taxed (no income tax) |
| British Virgin Islands | Territorial | 0% (no personal income tax) | Not taxed (no income tax) |
| Cayman Islands | Territorial | 0% (no personal income tax) | Not taxed (no income tax) |
| Costa Rica | Territorial | 25% | Not taxed — foreign pensions are foreign-source (e.g. US Social Security not taxed) |
| Georgia | Territorial | 20% | Exempt — treated as foreign-source passive income and not taxed in Georgia for a resident |
| Hong Kong | Territorial | 17% | Not taxed (only Hong Kong pensions are within salaries tax); foreign pensions are outside scope |
| Kuwait | Territorial | 0% (no personal income tax) | Not taxed — no PIT on individuals in Kuwait |
| Malaysia | Territorial | 30% | Exempt for resident individuals under the foreign-source-income exemption to 31 Dec 2036 (documentation required) |
| Malta | Remittance basis | 35% | Foreign pension taxed only on the portion actually remitted to Malta (untaxed if not remitted); under a residence programme remitted income is taxed at a flat 15% |
| Monaco | Territorial | 0% (no personal income tax) | Not taxed in Monaco (no personal income tax); a foreign pension may still be taxed at source by the paying country |
| Oman | Territorial | 0% (no personal income tax) | Not taxed currently; from 2028 income earned abroad and foreign-employment salaries are listed as exempt under the PIT law |
| Panama | Territorial | 25% | Exempt — foreign pensions are foreign-source and outside Panama's tax |
| Philippines | Territorial | 35% | Not taxed for resident aliens (foreign-source income of aliens is outside Philippine tax) |
| Qatar | Territorial | 0% (no personal income tax) | Not taxed — no PIT on employment/personal income; territorial system reaches only Qatar-source business income |
| Saudi Arabia | Territorial | 0% (no personal income tax) | Not taxed — no PIT on individuals' employment income; pensions are not within the individual income tax base |
| Singapore | Territorial | 24% | Generally not taxed (foreign-source income received by an individual is exempt unless via a Singapore partnership) |
| Thailand | Remittance basis | 35% | Taxable as remitted foreign income if brought into Thailand (earned 2024+); LTR-visa pensioners are exempt on remitted foreign income |
| The Bahamas | Territorial | 0% (no personal income tax) | Not taxed (no income tax) |
| United Arab Emirates | Territorial | 0% (no personal income tax) | Not taxed — no personal income tax on individuals |
| Uruguay | Territorial | 36% | Foreign pensions are generally outside the scope of Uruguayan income tax (territorial system) |
Source: PwC Worldwide Tax Summaries. Data as of June 2026.
Territorial vs remittance vs worldwide
The three models behave very differently for a mover. Territorial ignores foreign income outright. Remittance taxes foreign income only when you bring it into the country, so timing matters. Worldwide taxes everything regardless of where it arises, with treaty relief. The same person can pay almost nothing in a territorial country and a top marginal rate next door. Read the full explainer in territorial vs worldwide taxation, and check how easily you become resident with the day counter.
Frequently asked questions
What is territorial taxation?
Under territorial taxation, a country taxes only income sourced inside its borders and ignores income earned abroad — so a foreign pension, foreign dividends and offshore business income are typically not taxed locally. It contrasts with worldwide taxation, where a resident is taxed on income wherever it arises. A remittance basis is a related half-way model: foreign income is taxed only if you bring it into the country.
Which countries use territorial taxation?
Well-known territorial (or near-territorial) destinations include Panama, Costa Rica, Georgia, Malaysia, Singapore, Hong Kong, Uruguay and the Philippines (for resident aliens). Malta, Ireland and (for new arrivals) the UK use a remittance-style basis. The exact scope varies — some tax remitted foreign income, some only foreign business income — so always check the country profile.
Is territorial taxation a loophole?
No — it is the legal tax system those countries chose, and it is fully compatible with reporting and anti-avoidance rules. But the source of income matters: work physically performed while you sit in a territorial country can be treated as local-source even if the client pays from abroad. And US citizens are still taxed worldwide regardless. Not tax advice.
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Last updated: 2026-06-21