Don’t optimise the system you’re in, optimise which system you’re in.

slin921
2 days ago
5 min read

Updated: 24 hours ago

A guide to tax and residency.

When tax time rolls around, many of us try to work out how we can pay less tax – through deductions, business expenses or other allowable offsets. We spend time working out how we can minimise our taxable income, and hope that the tax office will let it through.

In short, we try to optimise within the system we’re in.

But what if you could optimise which system you’re in?

The biggest lever that many high net wealth individuals use is picking and choosing the tax systems they’re part of, rather than just paying it where they live. And luckily, your tax residency doesn’t depend on your residency status (i.e. whether you’re a citizen, permanent or temporary resident).

And that one choice can save you a lot more money than you might think.

How can tax systems around the world help me?

Tax systems across the world are made up of different combinations, and understanding those differences can save you thousands of dollars each year.

For example, if you earn $300,000 USD annually, this is what your take-home could look like (based on income alone using 2025 rates):

Country	Net income	Tax paid
UAE	$ 300,000	$ 0
Hong Kong	$ 255,578	$ 44,422
Singapore	$ 241,331	$ 58,669
Malaysia	$ 223,053	$ 76,948
Taiwan	$ 209,146	$ 90,854
United States	$ 203,541	$ 96,459
Australia	$ 180,988	$ 119,012

Source: whatstheincometax.com/compare-tax-countries (figures are illustrative and may not reflect current rates)

So the difference between being a tax resident in Hong Kong and Australia is that your income tax could be halved.

If you lived in the UAE, you wouldn’t pay any income tax at all.

This isn’t the end of the story though, as different tax systems treat tax differently. Here are some comparisons of typical features of other tax systems:

Feature	Description	Country examples
No income tax	Certain countries have no income tax at all	UAE, Bahamas, Monaco, Cayman Islands
No tax on foreign income	Only income earned within the country’s borders are taxed – any income that is foreign-sourced is tax-free	Singapore, Hong Kong, Malaysia do not tax foreign income Countries like UK / AU / US / Germany / France do tax foreign income
No capital gains tax	The gains you make on your investments (such as stocks or property) are not taxed as part of your income	Singapore, Hong Kong, New Zealand, Belgium, Switzerland, Monaco, UAE
No dividend tax / low dividend withholding	Dividends from shares aren’t taxed, or are taxed at very low rates	Singapore, Hong Kong, Estonia
No inheritance / estate tax	Estate tax is taxed on a deceased person’s estate, past a certain threshold, before it is passed on to the next generation. In most cases it requires a substantial estate to be of significant concern.	Australia, Singapore, Hong Kong, Malaysia, New Zealand, Canada, Mexico, Sweden US / UK / France / Japan all have estate tax past certain thresholds

These will each apply to you differently depending on your circumstances, for example:

if you are actively involved in stock trading or investing in property, jurisdictions with no capital gains tax or no dividend tax would work better for your financial situation; or
if you only earn income in one country, or primarily through employment income then jurisdictions that don’t tax foreign income, or don’t tax income at all might work better for you.

Depending on which of these tax systems works best for you, the next step will be to work out how to fall under their jurisdiction.

How do I access these tax systems?

To determine if you can fall under the tax system of your choice, you need to see whether you’re a tax resident of the country or not.

Tax residency is established differently everywhere you go, but in most cases, tax offices will be looking at:

Time spent in the country: have you spent more than half of the year in the country? Have you worked more than half of the year in the country? In most countries (like the US, UK, Australia and Singapore), this threshold is calculated using 183 days of physical presence (using the OECD Model Tax Convention as a base); in other countries, the threshold is calculated using more specific formulae. It isn’t a hard and fast rule, but it is a starting point for many countries.
Economic and personal ties to country: Have you opened bank accounts in the country? Have you bought a property? Is your business incorporated or operating in the country? Are you living in the country? Is your family living in the country? Are you part of any professional associations? These types of connections make it more likely that you are a tax resident of a country.
Proof of intention: have you ‘severed ties’ with your home country (e.g. sold your house, sold your investments, taken your kids out of school etc.)? Have you established a home somewhere else? Are you kids going to school there? Essentially, what actions suggest you intend to live in a place long-term? This one is especially important when you’re ‘between’ countries – if you haven’t established your new home well enough, then your original country may claim you are still their tax resident.

Critically, your residency status (whether as a citizen or a permanent / temporary resident) by itself does not determine your tax residency - you can be a citizen of a country and tax resident of another (depending on the rules and regulations that govern each country).

That means you can get the benefits of being a citizen in country A (say, Australia’s public healthcare system) and get the benefits of better tax systems by being a tax resident in country B (say, Hong Kong’s income tax system).

This allows wealthy individuals to dip into the benefits of both countries, ultimately being able to have their cake, and eat it too.

So, what should I do?

This analysis isn’t the end of the story.

While you could make your decision purely based on paying less tax in a country, the lifestyle in those countries might not be suitable to you. Your job might not be available in the country you’re moving to, the education for your children might not be to your standards, or other creature comforts you’re looking for might not be available.

At Pebly, we believe that life and wealth are closely intertwined, and we help in connecting the dots between them for you.

If you’re looking for some guidance or further considerations on how these could impact your situation, reach out to us at hello@pebly.com.

Disclaimer: The information provided in this content is for general informational purposes only, and does not constitute legal, financial, immigration, or tax advice. Tax laws, residency rules, and financial regulations vary significantly between jurisdictions and are subject to change. The figures and comparisons included are illustrative and may not reflect current rates or laws. Before relying on the information above, we strongly recommend seeking independent professional advice tailored to your specific circumstances.

Pebly does not guarantee the accuracy of third party data referred to and is not responsible for any decisions made based on this content.

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