by Yevhenii Dubinko | Istock | Getty Images
The United Arab Emirates has the strongest passport in the world, according to a new index.
The country jumped from a tie for 32nd in last year’s ranking to No.1, according to a new index from tax and immigration consultancy Nomad Capitalist.
The Emirati passport jumped up the list because it has visa-free travel privileges to the most places (181 in total), no income tax and an ever-growing presence on the world stage, making it attractive to aspiring global citizens, the company said.
Unlike other rankings that focus exclusively on visa-free travel privileges, the “Nomad Passport Index 2023” considers five factors each given different weighting:
Apart from visa-free travel, the categories are assessed according to scores ranging from 10 to 50, said Jovana Vojinovic, Nomad Capitalist’s director of operations and sales.
For example, she said that taxation is based on the long reach of a country’s tax laws, as well as a country’s tax rates:
- Citizen-based tax: where passport holders pay regardless of where they live – score of 10
- Resident tax: where residents are taxed on worldwide income – score of 20 (if rates exceed 50%) or 30 (if they do not)
- Territorial tax: where income from the country is taxed – score 40
- No income tax – score of 50
Countries that score 10 for tax include the United States and Eritrea, which use worldwide “citizen-based” tax rules, Vojinovic said.
“You could theoretically live on the moon if you’re a US citizen and you pay taxes to the US,” she said.
South Africa is “flirting” with adopting the system but is unlikely to be able to enforce it because it lacks the influence that the US has over the global banking system, which as a condition of working with US citizens requires them to comply federal regulations. IRS rules, Vojinovic said.
Another factor — dual citizenship — applies in two ways, she said — first, if a country allows its citizens to acquire a new citizenship, and second, if 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, Vojinovic said. But the bottom line for this category is: “Would someone bother you at the airport as a citizen of that country?”
Here is the complete list, from 1 to 199:
The score on this year’s ranking is generally lower than last year’s, due to a change in the way Nomad Capitalist achieved visa-free travel.
This year, visa-on-arrival and e-visa are not included, which means that many countries are losing ground on this factor, said Vojinovic. For example, last year’s No. 1 passport – Luxembourg – scored 189 in this category; this year it fell to 174.
Vojinovic called the UAE passport “the winner of the decade”.
The UAE “has added 106 new visa-free countries over the last decade, which is an incredible number,” she said. “They are also a zero tax country.”
Its perception improved in the past year because of an influx of rich and famous people moving there, she said. She said several years ago, clients would say “‘I’m not sure how safe it is’ or ‘we heard some things about your laws,’ referring to it being a predominantly Muslim country.”
Others would conflate the United Arab Emirates with Saudi Arabia, “grouping it all together,” she said.
But slowly people began to realize that it has “very liberal visa policies and is very welcoming to foreigners, welcoming to investment… (it has) pretty much become a destination for most people who have crypto-based businesses.”
Vojinovic said “more and more people” are moving, and not just “exotic digital nomads” either.
She said that more retirees are looking to move to countries that have better healthcare and “freedom”.
“Freedom is going to be highlighted in the next couple of years, especially in this industry, as we see massive, massive waves of immigration from certain countries,” she said. “I think Canada … is leading this whole movement.”
Canada regularly tops passport rankings, but its ranking fell this year due to a loss of points in two categories: perception and personal liberties, caused by incidents such as the jailing of protesters involved in the “Freedom Convoy” protests, Vojinovic said.
“Canadians are very big on Costa Rica,” she said, “Americans especially like Portugal.”
But Portugal was also popular with many others, Vojinovic said, including wealthy people seeking an EU residence permit and digital nomads, retirees and families.
Portugal’s lax entry policy has not been as welcome among its citizens. An influx of outsiders caused a housing crisis in the country, with sky-high rental and purchase prices. Among other measures, the government announced in February that it was ending its “Golden Visa” program to stabilize property costs.
“The same thing happened” in Costa Rica, she said. “Most people think it’s a bit dirt cheap, okay, we save a bunch of money by going there. But … a lot of foreigners came to the country. Rents started to jump.”
Mexico is another place that has proven popular, especially during the pandemic, because it “had no Covid mandates,” while “crypto people” are drawn to El Salvador because Bitcoin is legal tender there, she said.
