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Non-State Territories

The following territories are de jure no states, but de facto jurisdictions on their own. This means that they are not recognized as independent states by most of the world, but do in fact have the power and structures to set and enforce law within their territory. Since real power is the only thing that makes law binding, their tax policies need to be taken into account despite their legal status.

1. Western Sahara

  • Designation: Sahrawi Arab Democratic Republic (SADR)
  • Acting Independently Since: 1976 (declaration of independence), though it is largely administered by Morocco.
  • Corporate Income Tax (CIT): N/A, as Western Sahara does not maintain a distinct tax system separate from Moroccan law in areas it administers. In areas controlled by the Polisario Front, no formal taxation regime is enforced.
  • Personal Income Tax (PIT): N/A, follows Moroccan taxation for Moroccan-administered regions.
  • VAT: 20% (as per Moroccan VAT); applicable to goods and services.
  • Inheritance and Gift Taxes: N/A, follows Moroccan tax regulations where applicable.
  • Other Taxes: Morocco’s tax system, including customs duties and property taxes, generally applies.
  • Double Tax Agreements (DTA): Morocco’s DTAs are applied.
  • International Sanctions: The region is subject to disputed status, with no specific sanctions, but certain international businesses may avoid the region due to political uncertainty.
  • AML Risk: Moderate; limited governance and financial transparency may heighten AML risks in Polisario-controlled regions.

2. South Sudan

  • Designation: Republic of South Sudan
  • Acting Independently Since: 2011 (declaration of independence from Sudan).
  • Corporate Income Tax (CIT): 10% for companies with gross turnover less than SSP 1 million; 20% for companies exceeding this threshold.
  • Personal Income Tax (PIT): Progressive, 0% to 20% depending on income level.
  • VAT: 18% on most goods and services.
  • Inheritance and Gift Taxes: South Sudan does not currently levy inheritance or gift taxes.
  • Other Taxes:
    • Excise Duties: Applied on alcohol, tobacco, and fuel.
    • Customs Duties: Levied on imported goods, rates vary depending on the product.
  • DTA: No known DTAs. Limited international recognition, with some formal diplomatic relations.
  • International Sanctions: Yes, certain individuals and sectors are under sanctions from the US, UN, and EU due to the ongoing civil conflict.
  • AML Risk: High; South Sudan is considered a high-risk jurisdiction due to weak governance, corruption, and civil unrest, which increase AML risks.

3. Palestine (West Bank and Gaza)

  • Designation: Palestinian Authority (West Bank) / Hamas Administration (Gaza Strip)
  • Acting Independently Since: 1994 (Palestinian Authority).
  • Corporate Income Tax (CIT): 15% (West Bank); 20% (Gaza Strip).
  • Personal Income Tax (PIT): Progressive in the West Bank, ranging from 5% to 15% on income.
  • VAT: 16% across both West Bank and Gaza Strip.
  • Inheritance and Gift Taxes: Inheritance tax is generally not applied, but gifts may be subject to local taxation based on value.
  • Other Taxes:
    • Property Tax: Applied locally, depending on the area.
    • Customs Duties: Applied based on goods imported into Palestinian territories.
  • DTA: Few formal DTAs, but Palestine benefits from agreements under the Arab League.
  • International Sanctions: Gaza (under Hamas) is subject to strict sanctions, while the West Bank faces fewer restrictions.
  • AML Risk: High, particularly in Gaza due to limited governance and transparency, and the involvement of non-state actors.

4. Somaliland

  • Designation: Republic of Somaliland
  • Acting Independently Since: 1991 (declaration of independence from Somalia).
  • Corporate Income Tax (CIT): 10% on taxable profits.
  • Personal Income Tax (PIT): Progressive, ranging from 0% to 10% depending on income.
  • VAT: 5% (estimated, though not consistently enforced).
  • Inheritance and Gift Taxes: Not clearly defined; Islamic law often influences local practices regarding inheritance.
  • Other Taxes:
    • Customs Duties: Applied on imports, rates vary based on product category.
    • Excise Taxes: Applied on tobacco, alcohol, and fuel.
  • DTA: No formal DTAs. Somaliland is not recognized internationally as a state.
  • International Sanctions: No specific international sanctions, but as part of Somalia, the territory may face indirect challenges.
  • AML Risk: High, due to lack of formal recognition, weak institutions, and high informal economic activity.

5. Northern Cyprus

  • Designation: Turkish Republic of Northern Cyprus (TRNC)
  • Acting Independently Since: 1983 (only recognized by Turkey).
  • Corporate Income Tax (CIT): 10%, with a 15% withholding tax on profits, leading to an effective tax rate of 25%.
  • Personal Income Tax (PIT): Progressive, ranging from 10% to 37% depending on income.
  • VAT: 16% standard rate, with reduced rates of 8% and 1% for essential goods.
  • Inheritance and Gift Taxes: Northern Cyprus levies inheritance tax on estates, based on the value of the property.
  • Other Taxes:
    • Property Tax: Municipal property taxes are applied based on the assessed value.
    • Excise Duties: Applied on fuel, tobacco, and alcohol.
  • DTA: Only recognized by Turkey, hence DTAs are limited to Turkey.
  • International Sanctions: Northern Cyprus is under indirect sanctions due to its lack of international recognition.
  • AML Risk: Moderate; Northern Cyprus is considered higher risk due to lack of broad recognition, making financial transactions with global institutions challenging.

6. Transnistria (Pridnestrovian Moldavian Republic)

  • Designation: Pridnestrovian Moldavian Republic (Transnistria)
  • Acting Independently Since: 1990 (unrecognized by Moldova)
  • Corporate Income Tax (CIT): 10% on taxable income. All resident entities are taxed on worldwide income.
  • Personal Income Tax (PIT): 10% flat rate for all income earners.
  • VAT: 20% standard rate. VAT applies to most goods and services, though certain essential goods such as medicines may be subject to reduced rates.
  • Inheritance and Gift Taxes: No specific inheritance or gift taxes; gifts may be taxed under income tax regulations.
  • Other Taxes:
    • Property Tax: A tax based on the value of real estate is levied.
    • Excise Taxes: Applied on alcohol, tobacco, and fuel.
    • Customs Duties: Levied on imported goods, with varying rates depending on the product.
  • Double Taxation Agreements (DTA): No formal DTAs; limited international recognition.
  • International Sanctions: No specific international sanctions, but businesses may face risks due to the lack of recognition.
  • AML Risk: High; the region’s lack of transparency and regulatory oversight increases the likelihood of triggering AML measures when conducting international business.

7. Abkhazia

  • Designation: Republic of Abkhazia
  • Acting Independently Since: 1992 (recognized by a few countries, including Russia)
  • Corporate Income Tax (CIT): 18% on profits. Companies in priority sectors, such as agriculture and tourism, may benefit from lower rates.
  • Personal Income Tax (PIT): Progressive, 10% to 15%, depending on income.
  • VAT: 10% on most goods and services.
  • Inheritance and Gift Taxes: Inheritance is subject to a flat tax rate depending on the value of the estate.
  • Other Taxes:
    • Property Tax: Levied on real estate, based on its assessed value.
    • Excise Taxes: Applied to tobacco, alcohol, and fuel.
    • Customs Duties: Applied to imported goods, with rates varying based on the category.
  • DTA: Recognized by Russia and a few other countries, limiting DTA applicability.
  • International Sanctions: No specific sanctions, but the region’s contested status affects international transactions.
  • AML Risk: Moderate to high, particularly due to limited oversight, weak regulatory frameworks, and the region’s reliance on informal economic networks.

8. South Ossetia

  • Designation: Republic of South Ossetia
  • Acting Independently Since: 1991 (recognized by Russia and a few other countries)
  • Corporate Income Tax (CIT): 15% on profits.
  • Personal Income Tax (PIT): 10% flat rate on personal income.
  • VAT: 10% on most goods and services.
  • Inheritance and Gift Taxes: No specific taxes on inheritance or gifts, but gifts may be treated as income.
  • Other Taxes:
    • Property Tax: Levied on real estate based on market value.
    • Excise Taxes: Applied on alcohol, tobacco, and luxury goods.
    • Customs Duties: Applied on imported goods, with rates based on the type of product.
  • DTA: Limited to countries that recognize South Ossetia, including Russia.
  • International Sanctions: The region’s contested status impacts trade, although no direct sanctions are placed.
  • AML Risk: High; weak governance and the reliance on Russia for economic stability elevate AML concerns.

9. Sealand

  • Designation: Principality of Sealand
  • Acting Independently Since: 1967 (self-declared micronation)
  • Corporate Income Tax (CIT): N/A, as Sealand does not enforce any corporate income tax.
  • Personal Income Tax (PIT): N/A, no personal income tax is levied.
  • VAT: N/A, Sealand does not operate a value-added tax system.
  • Inheritance and Gift Taxes: N/A, no formal taxation system exists.
  • Other Taxes: Sealand does not enforce any standard taxes such as customs duties, property tax, or excise duties.
  • DTA: No double taxation agreements due to its lack of recognition.
  • International Sanctions: No specific sanctions, but Sealand’s lack of international recognition limits its ability to engage in formal international trade.
  • AML Risk: High; due to its unrecognized status and lack of formal financial regulations, transactions related to Sealand may raise red flags in AML monitoring systems.

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