Global tax systems

Most common tax systems

By far the most common tax systems used in the world today are the residence-based and the territorial-based tax systems. Some countries use a hybrid system with properties from both of these. Four countries use the citizen-based system. Several countries have no income tax.

What is the citizen-based tax system?

Of particular interest is the citizen-based tax system used by only the following four contries:

• Eritrea
• Hungary
• Myanmar
• United States

The citizen-based tax system is considered by many as oppressive because this system follows people around the world regardless of where they may live, work or study. It entails that the government imposes taxes due on citizens even though they have moved to another country and established their life there. Oftentimes countries sign taxation treaties in order to avoid double taxation, however the paper-work required can often be extensive and large fines imposed for mistakes made.