Death and taxes may be inevitable no matter where you live in the world, but how much you have to pay the tax man may depend on where you live.
Some countries rely heavily on revenue to pay for a variety of programs, including infrastructure, national defense, and government worker salaries. It could also be used for programs that help the public such as health care, education, or safety net programs.
But where countries spend their money can determine how much they need to collect in taxes, with some places taking more money from residents than others. Data from the International Monetary Fund compared how much of a country's gross domestic product, or GDP, came from taxes to determine which countries collect the most and least tax revenue.
Northern Europe Leads Nations
Countries in northern Europe lead all nations in high taxes. In fact, of the top 10 most-taxed countries, seven of them are European countries and five of those seven are in the northern reaches of the continent.
Denmark leads all countries with 45.3% of its revenue coming from taxes. It's the only nation in the world with tax revenue that's more than 40% of GDP. But Danes are among the happiest people in the world, according to the World Happiness Report, and part of that may be because of its high tax rate. In exchange for paying high taxes, Danes get free education, including free university tuition and a monthly stipend for living expenses while in school. They also get a year of parental leave to split between both parents and five weeks' holiday allowance each year. Health care is covered, childcare is subsidized, and taxes also fund pensions and elderly care.
Second-place Bulgaria pays 38.8% of GDP in taxes while a very close third-place Sweden pays 38.7%. Taxes in Sweden cover education, childcare, health care, and elderly care.
Taxes that support the public good may explain why several countries on the list remain happy despite paying high rates. For example, Finland, Iceland, Denmark, and Sweden are among the top five happiest countries, according to the World Happiness Report, while also ranking among the top 10 countries with the highest tax-to-GDP ratios.
The top 10 countries with the highest taxes as a share of GDP include:
- Denmark
- Bulgaria
- Sweden
- Namibia
- Iceland
- New Zealand
- Norway
- Eswatini
- Luxembourg
- Finland
Middle East, Africa Pay the Lowest Taxes
All 10 countries with the lowest tax burdens are located in Africa or the Middle East.
Libya leads all nations with only 1.2% of the country's GDP covered by taxes. Second-place Kuwait isn't far behind at 1.4%, while Iraq collects only 1.7% of its GDP as taxes.
One reason some Middle Eastern countries have low taxes is their high level of oil production. Nations like Kuwait, Qatar, Bahrain, and Oman rely on oil revenue to fund government spending rather than taxes.
The 10 countries with the lowest tax revenue as a share of GDP include:
- Libya
- Kuwait
- Iraq
- Yemen
- Sudan
- Somalia
- Nigeria
- Qatar
- Bahrain
- Oman
How Does the U.S. Fare?
You may be surprised to find that the U.S. falls somewhere in the middle when it comes to how much residents pay in taxes.
In the United States, tax revenue makes up 19.5% of GDP, which ranks it 80th globally. That also puts Americans slightly above the world average of 17.6% for tax revenue as a share of GDP.