Introduction to Dubai LLC vs Hong Kong LLC
Online entrepreneurs often choose either a Dubai company or Hong Kong company.
There are different reasons why they choose a Dubai company over a Hong Kong company or vice versa.
In this article, we will first look at the reason why people choose over the other and then elaborate the differences between them.
- Dubai company vs Hong Kong company: Which one to choose when?
To make the decision which one to choose comes down to your personal life situation and your goals.
There are three possible setup options which we have seen freelancers and business owners choose.
Dubai LLC vs Hong Kong LLC: All setup options
Option 1: Only a Dubai company
There are entrepreneurs who only have a Dubai company.
Usually people who choose a Dubai company do so because of couple of reasons:
- Visa: they live in Dubai and they need a visa for permanent stay. They can receive a visa through their own Dubai company
- Investing: they want to buy apartments in Dubai through their Dubai company
- Compliance residency: they need a tax residency somewhere in the world with low taxes on personal income and at the same time to show government officials and banks their residency status
- Low taxes on personal and corporate level: They need a company to bill their clients and choose a Dubai company due to low taxes.
From our knowledge, a Dubai company in 2025 and onwards only makes sense if you actually live there and need a visa for permanent stay. This means only reason 1 and possibly reason 2 are currently viable reasons.
For reason number 3, you could have a compliant residency for much cheaper in countries such as Paraguay. Paraguay is famous for easy residency, no personal taxes, and low cost for a visa.
For reason number 4, this would only make sense if you have a profit below 100k USD. Profit above 100k USD will be taxed by 9% corporate tax which is a law that came in very recently in Dubai.
Option 2: Only a Hong Kong company
If you are not living in Dubai, then a Hong Kong company is more suitable for you.
Here are the reason why people choose a Hong Kong company over a Dubai company:
- 0% corporate taxes if you have no operations in Hong Kong
- Stable legal and tax laws: the tax law in Hong Kong has not changed over 10 years and it is not intended to lure businesses into the country and later on tax them.
- Asset protection: you can leave your money in your business bank account and even invest in stock markets. You can easily get an interactive broker account for a Hong Kong company, which may not be that easy for a Dubai company.
- Reputation in Europe: Dubai used to not have a great reputation because of lack of bookkeeping, accounting, and tax filing. Many clients in Europe tend to not work with Dubai companies due to those reasons.
Option 3: Both a Dubai and a Hong Kong company
If you choose Dubai as a place to live, of course, you may be required to have a Dubai company.
Some entrepreneurs additionally to their Dubai company choose to open a Hong Kong company as well.
Although, on the first sight, it comes with disadvantages of paying double maintenance companies. On the other hand, for some business owners, the advantages outperform disadvantages. Here are a few examples why entrepreneurs living in Dubai choose a Hong Kong company:
- Save the 9% corporate tax in Dubai: they use the Dubai company only as a way to get their visa, but they bill all the clients through the Hong Kong company and enjoy 0% corporate tax in Hong Kong.
- Banking infrastructure: they choose the Hong Kong company as their central point to bill clients because it is easy to have access to strong banks such as HSBC, Airwallex, and payment gateways such as Paypal and Stripe. Especially the payment gateways are interesting for e-commerce business owners because Paypal and Stripe are not easy to set up with the Dubai company.
- Asset protection: In Hong Kong, you can protect your assets through your company and even invest in the stock markets as you can get access to interactive brokers.
- Dubai company vs Hong Kong company: Tax rate
Dubai LLC vs Hong Kong LLC: The taxes
Dubai company taxes:
The corporate taxes in Dubai are twofold:
- From 0-100k USD: 0%
- Above 100k USD: flat 9%
There are no taxes on personal income and dividend income in Dubai.
Although this is a very good tax structure and much lower than other countries, many entrepreneurs feel cheated by the Dubai government and the new 9% corporate tax.
The Dubai government used to promise to keep Dubai a 0% tax haven.
Dubai abolished the 0% tax because they want it to gain a better reputation in Europe. It is not clear at this point where this road may lead to.
Hong Kong company taxes:
The Hong Kong company corporate taxes are twofold:
- Until 2 Million Hong Kong Dollars: flat 8.25%
- Above 2 Million Hong Kong Dollars: flat 16.5%
This means if you have a revenue above 2 Million Hong Kong Dollars, everything until 2 Million Hong Kong Dollars will be taxed at 8.25% and the amount above 2 Million Hong Kong Dollars will be taxed at 16.5%.
But, if all your clients are outside of Hong Kong, you can enjoy a 0% corporate tax like many our clients do.
If you want to know how it may work for you, feel free to book a consultation call with us.
- Dubai company vs Hong Kong company: Mandatory requirements
Dubai LLC vs Hong Kong LLC: The Mandatory Requirements
Dubai company mandatory requirements:
Recently, Dubai did not have any taxes (no corporate taxes and personal taxes). Therefore, the Dubai government is still working on the process for a new mandatory requirement following the 9% corporate tax.
This means that there is bookkeeping, tax filing, and audit involved now for every Dubai company to keep compliant. As this is very new for the Dubai tax government, we presume that there will be not very clear guidance for the upcoming year and confusion among entrepreneurs and business owners.
Hong Kong company mandatory requirements:
As Hong Kong has a very robust tax government procedure, the duties, requirements, and processes are very clear and written down on the government page.
In Hong Kong, every year, the following aspects should be followed:
- Annual renewal each year on the anniversary date of your company incorporation
- Tax filing and audit four months after annual renewal
- Mandatory virtual office address
- Mandatory secretary
- Every third year audit of the offshore label of your company
- Dubai company vs Hong Kong company: Costs
Dubai LLC vs Hong Kong LLC: The running costs
Dubai company costs:
Before the new corporate tax was introduced, the costs were the following in Dubai:
- Setup costs for Dubai company: 10-15.000 USD
- Maintenance cost for Dubai company: 5000 USD/year
With the introduction of corporate tax in Dubai we expect the maintenance cost to have increased by at least 25-50% in order to cover tax accountants and auditors.
Hong Kong company costs:
A Hong Kong company costs can be divided into 2 blocks:
- Setup costs for Hong Kong company: 1000-2000 USD depending on provider and what service is included (consultation, referral to banks, bank opening)
- Maintenance cost for Hong Kong company: 3000-4000 USD/year depending on provider (agency vs CPA) and service included (consultation, legal contracts with clients and with partners, audits, offshore label application, tax filing, annual renewal, etc.)
- Dubai company vs Hong Kong company: How do I pay myself?
Dubai LLC vs Hong Kong LLC: The CEO Payout
Dubai company: Dividend or personal income?
If you live in Dubai and you have a Dubai company, there is no difference when you pay yourself out or dividend or personal income.
Both of them are taxed with 0%.
Hong Kong company: Dividend or personal income?
Most of our clients choose to pay themselves out dividends because these are not taxed in Hong Kong and if they live in a country with a territorial tax system (Thailand, Philippines) or they are digital nomads, then they are not taxed in a country of residency.
One of the features of dividends in Hong Kong is that you can pay yourself out anytime and any amount. In other countries such as Germany, you can pay out dividends only at the end of the year. In Hong Kong, you can basically pay yourself out each month as if it is personal income but in reality it is not.
- Dubai company vs Hong Kong company: Choosing the right service provider
As we saw in this article, it always comes down to your personal situation.
We would suggest the followings:
If you really want to live in Dubai and you need a permanent visa, you need a Dubai company to sponsor your company visa.
If you live in Dubai, you probably already make a good amount of money. In this case, we suggest adding a Hong Kong company in order to
- Reduce your taxes
- Protect your assets
If you do not live in Dubai, we do not see any advantages of having a Dubai company unless you have a special business that runs with the Dubai firm.
