In a territorial system a country taxes only income that comes from inside it, so a resident earning from abroad can pay little or nothing there. Several popular nomad bases are territorial or close to it, but they differ a lot on the details. Some tax foreign income as soon as you bring it in, some have exemptions with expiry dates, and one has a rule change that has been “coming” for over a year.
Last checked: September 2026
In short:
- In a territorial tax system a country taxes only income that comes from inside it; Panama, Georgia and Hong Kong are examples.
- Thailand taxes residents’ foreign income earned from 1 January 2024 when it is remitted, and a proposed exemption was still a draft, not law, as of late September 2026.
- Malaysia exempts foreign-sourced income received in Malaysia by resident individuals from 1 January 2022 to 31 December 2036, subject to conditions.
Three different systems
Territorial. Only local-source income is taxed. Foreign income is outside the system whether or not you bring it into the country. Examples: Panama, Georgia, Hong Kong.
Remittance basis. Foreign income is taxable only when it’s brought into the country. Leave it offshore and it isn’t taxed. Bring it in and it may be. Thailand now works this way for residents.
Non-dom / special regimes. A worldwide system that gives some people, often new arrivals, relief on foreign income for a limited period. Uruguay’s tax holiday is a good example.
The key question in each case is what counts as local-source income. If you run a business from your laptop in Panama City, a tax authority could argue that some of that income is sourced there because that’s where the work happens. Being territorial doesn’t mean income is exempt just because your invoices go to foreign clients.
Comparison
| Country | System for individuals | Foreign income treatment | Notes |
|---|---|---|---|
| Panama | Territorial | Citizens and residents taxed only on Panamanian-source income | Local rates 0% / 15% / 25% (top rate above $50,000) |
| Costa Rica | Territorial | Tax is levied on Costa Rican-source income | Anything earned inside Costa Rica is Costa Rican-source. Check for reforms before relying on this |
| Paraguay | Territorial | Residents taxed on Paraguayan-source income | Personal services taxed 8–10%, capital gains 8%. PwC’s summary doesn’t address foreign-source investment income, so confirm locally |
| Malaysia | Worldwide in principle, with an exemption | Foreign-sourced income received in Malaysia by resident individuals is exempt from 1 January 2022 to 31 December 2036, subject to conditions | Income received through a Malaysian partnership business is treated differently. Top resident rate is 30% |
| Thailand | Remittance basis | Foreign income earned from 1 January 2024 is taxable if remitted in the same or a later year. Income earned before 2024 is protected if you can document it | A proposed exemption for income remitted in the year earned or the following year is still a draft and not law as of late September 2026. Top rate 35% |
| Georgia | Territorial | Residents exempt on income without a Georgian source | Flat 20%. Individual entrepreneurs with small business status pay 1% of turnover up to GEL 500,000 (3% above that) |
| Uruguay | Mostly territorial, with passive foreign income taxed | Foreign passive income (interest, dividends, some gains) is normally taxed at 12% | New residents can get a tax holiday on foreign income: 11 years exempt, then 5 years at 6%. From 1 January 2026 qualifying is harder (see below) |
| Hong Kong | Territorial | Salaries tax applies to Hong Kong-sourced employment income | Standard rate 15% on the first HK$5m of net income, 16% above that (2025/26) |
| Singapore | Effectively territorial for individuals | Foreign income is taxable only if a resident receives it in Singapore through a Singapore partnership | Resident rates 0–24%, top rate above S$1m |
| Philippines | Depends on status | Resident citizens are taxed on worldwide income. Non-resident citizens and all foreigners (resident or not) are taxed only on Philippine-source income | Top rate 35% above PHP 8m. Foreign residents are effectively territorial |
The details that matter
Thailand. Since 2024, foreign income earned while you’re Thai tax resident becomes taxable whenever you remit it, even years later. The Revenue Department has proposed exempting income brought in during the year it’s earned or the following year. It has been reported as close to done several times, but as of late September 2026 it hasn’t been published in the Royal Gazette, so the 2024 rule still applies. Don’t plan transfers around the draft. Keep clear records of balances from before 2024.
Uruguay. New rules from 1 January 2026 raised the bar for the tax holiday. Reported routes are now real estate of about US$2 million, US$100,000 a year into a national innovation fund, or 183+ days of physical presence. The old 60-day presence route has been removed. Existing holiday holders are grandfathered for the rest of their term.
Malaysia. The exemption for foreign income runs to the end of 2036. That’s long, but it has an end date and conditions, so don’t treat it as permanent.
Singapore. People often call it territorial, but technically foreign income is taxed only when received in Singapore through a partnership. For most individuals the result is the same, but if you have a partnership structure it’s worth checking.
Source rules. In every territorial country, work you physically do there can be local-source income, whoever pays you. Territorial systems work best when your income is clearly foreign: dividends from a foreign company you don’t manage locally, foreign rental income, or work done while you’re outside the country.
Territorial isn’t the whole plan
- Your old country may still treat you as resident (see our 183-day guide).
- US citizens are taxed on worldwide income regardless.
- Your company’s tax position is separate from your personal one. A foreign company managed from your new home can become tax resident there.
- Banks will ask for proof of tax residence. A territorial country that won’t issue a residence certificate can leave you stuck.
Related: Tax residency explained: why the 183-day rule is a myth for most countries · Tax-free countries (2026): no income tax countries you can actually live in · FEIE vs Foreign Tax Credit (2026): which one US expats should use · Exit tax explained: which countries charge it when you leave
Related guides: Paraguay residency in 2026: temporary, permanent and investor routes · Uruguay residency (2026): nomad ID, permanent route and tax holiday · Panama digital nomad visa: requirements, fees and tax (2026) · Cost of living in Georgia (the country, 2026): Tbilisi, Batumi, Kutaisi
Quick answers
Q: Which countries don’t tax foreign income?
Territorial countries tax only local-source income. Panama, Costa Rica, Paraguay, Georgia and Hong Kong are territorial, Singapore is effectively territorial for individuals, and the Philippines taxes foreigners only on Philippine-source income. Malaysia exempts foreign income received by residents until the end of 2036, subject to conditions, while Uruguay normally taxes foreign passive income at 12%.
Q: Does Thailand tax foreign income brought in by residents?
Yes. Since 2024, foreign income earned while you’re Thai tax resident is taxable whenever you remit it, even years later. Income earned before 2024 is protected if you can document it. A proposed exemption for income remitted in the year earned or the following year was still a draft, not law, as of late September 2026.
Q: Is income from foreign clients tax-free in a territorial tax country?
Not automatically. In every territorial country, work you physically do there can be local-source income, whoever pays you, so foreign invoices alone don’t make it exempt. Territorial systems work best when income is clearly foreign, such as dividends from a foreign company you don’t manage locally, foreign rental income, or work done outside the country.
Sources
- PwC Worldwide Tax Summaries: Panama
- PwC: Costa Rica
- PwC: Paraguay
- PwC: Malaysia, taxes on personal income
- PwC: Malaysia, income determination
- PwC: Thailand
- HLB Thailand: Draft foreign income remittance relief
- ThaiLawOnline: Remittance tax exemption status tracker
- Brer Rabbit Legal: Thailand remittance exemption 2026 status
- PwC: Georgia
- PwC: Uruguay
- IMI Daily: Uruguay tax holiday changes
- PwC: Hong Kong SAR
- PwC: Singapore
- PwC: Philippines
This is general information from the Nomad Forums team, not tax or legal advice. Rules change; check with a qualified adviser before acting.
Over to you: If you’re resident in a territorial country, how did your adviser handle work you do while physically there? And if you’re in Thailand, how are you managing remittances while the exemption is still in draft?