Not all passports are created equal. Here’s a list of the most powerful ones

The United Arab Emirates has the strongest passport in the world, according to a new index.

The country jumped from being tied for 32th place on last year’s ranking to the No. 1 spot, according to new index by the tax and immigration consultancy Nomad Capitalist.

The Emirati passport leapt up the list because it has visa-free travel privileges to the most places (181 in total), no income taxes and an ever-increasing presence on the world stage, all of which make it attractive to aspiring global citizens, the company said.

How the ranking works

Other than visa-free travel, the categories are assessed by scores that vary from 10 to 50, said Jovana Vojinovic, Nomad Capitalist’s director of operations and sales.

For example, she said taxation is based on the long-arm reach of a country’s tax laws, as well as a country’s tax rates:

  • Citizen-based tax: where passport holders pay no matter where they live — score of 10
  • Resident-based tax: where residents are taxed on worldwide income — score of 20 (if rates exceed 50%) or 30 (if they don’t)
  • Territorial tax: where income made within the country is taxed — score 40
  • No income tax — score of 50

Countries that score a 10 for taxation include the U.S. and Eritrea, which employ worldwide “citizen-based” tax rules, said Vojinovic.

“You can theoretically live on the moon if you’re a U.S. citizen, and you’ll pay taxes to the U.S.,” she said.

South Africa is “flirting” with adopting the system but probably won’t be able to impose it because it lacks the sway that the U.S. has on the global banking system, which as a condition to work with U.S. citizens requires that they comply with federal IRS rules, Vojinovic said.

Another factor — dual citizenship — applies in two ways, she said — first, if a country allows its citizens to get a second citizenship, and second, whether it allows foreigners to naturalize there as well.

Perception is based on both subjective views and objective data, such as the World Happiness Report and the Human Development Index, said Vojinovic. But the bottom line for this category is: “Will someone bother you at the airport as being a citizen of that country?”

The full list

Why the UAE ranked No. 1

More people are on the move

“Canadians are very big on Costa Rica,” she said, “Americans especially like Portugal.”

But Portugal was also popular with many others, said Vojinovic, including wealthy people who wanted a European Union residence permit and digital nomads, retirees and families.

Portugal’s lax entrance policies haven’t been as welcome with residents. An influx of outsiders caused a housing crisis in the country, with soaring rental and purchase prices. Among other measures, the government announced in February that it was ending its “Golden Visa” program to help stabilize real estate costs.  

“The same thing happened” in Costa Rica, she said. “Most people think it’s kind of dirt cheap, okay, we’re saving a bunch of money by going there. But … a lot of foreigners came in the country. Rent prices started jumping.”

Mexico is another location that has proven to be popular, especially during the pandemic, because it “didn’t have any Covid mandates,” while “crypto people” are attracted to El Salvador because Bitcoin is legal tender there, she said.  

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