Tax
Territorial taxation
Territorial taxation is a system under which a country taxes only income arising within its own borders, leaving foreign-source income of its residents outside the tax net entirely — whether or not that income is ever brought into the country.
In plain terms: The country taxes what happens inside it and ignores the rest.
Why it matters
Paraguay, Panama, Georgia, Costa Rica and Hong Kong are the commonly cited examples. It is the cleanest arrangement for a founder whose customers are elsewhere, and materially better than a remittance basis because there is no question of what counts as bringing money in.
Common misunderstanding
Forgetting that work physically performed in the country is often local-source income regardless of who pays for it. Running your business from a beach in a territorial country can create exactly the local income you moved to avoid.
Read the full guideTerritorial tax countries, ranked