A UAE company and a Hong Kong limited company are two common choices for founders who trade internationally. The UAE charges 9% corporate tax on taxable income above AED 375,000 and 0% on qualifying free zone income; Hong Kong charges 8.25% on the first HK$2,000,000 of profits and 16.5% above, and only on profits sourced in Hong Kong.
Updated
United Arab Emirates
Hong Kong| Criterion | United Arab Emirates | Hong Kong |
|---|---|---|
| Tax on company profits | 0% on taxable income up to AED 375,000; 9% above | 8.25% on the first HK$2,000,000 of assessable profits; 16.5% above |
| Special rates | Qualifying Free Zone Person: 0% on qualifying income, 9% on other taxable income | In a group of connected entities, only one nominated entity gets the lower 8.25% tier |
| What is taxed | Companies incorporated or effectively managed and controlled in the UAE, free zone companies included, on their income from inside and outside the UAE (foreign tax credit available) | Profits arising in or derived from Hong Kong; profits from abroad are not taxed, for residents and non-residents alike |
Hong Kong suits trading and holding businesses whose profits arise outside Hong Kong, which its territorial system leaves untaxed, at the cost of an audit every year. The UAE suits businesses with real activity there: taxable income up to AED 375,000 is taxed at 0%, and a qualifying free zone company can pay 0% on qualifying income.
The table compares the tax rates, the special regimes, what each taxes, the annual filings and an illustrative calculation, each row linked to the UAE's Ministry of Finance and Federal Tax Authority or to Hong Kong's Inland Revenue Department and Companies Registry.
| Criterion | United Arab Emirates | Hong Kong |
|---|---|---|
| Tax on company profits[1][2][3] | 0% on taxable income up to AED 375,000; 9% above | 8.25% on the first HK$2,000,000 of assessable profits; 16.5% above |
| Special rates[1][4] | Qualifying Free Zone Person: 0% on qualifying income, 9% on other taxable income | In a group of connected entities, only one nominated entity gets the lower 8.25% tier |
| What is taxed[1][2][3] | Companies incorporated or effectively managed and controlled in the UAE, free zone companies included, on their income from inside and outside the UAE (foreign tax credit available) | Profits arising in or derived from Hong Kong; profits from abroad are not taxed, for residents and non-residents alike |
| Annual tax filing and accounts[1][5][6] | Corporate tax return and payment within 9 months after the end of the tax period | Profits tax return, and financial statements audited every year (all companies except dormant ones) |
| Example: tax on a profit of 1,000,000 in each local currency; the amounts differ in value (illustration, not advice)[1][3][7] | AED 1,000,000 of taxable income, revenue above AED 3,000,000, not a qualifying free zone person: AED 56,250 (9% of AED 625,000) | HK$1,000,000 of assessable profits arising in Hong Kong: HK$82,500 (8.25%), before the 2025/26 waiver of up to HK$3,000 |
| Banking partners in our network | 10+ | 8+ |
General information, not legal or tax advice. Approval always rests with the institution or authority.
Hong Kong usually suits trading, sourcing and holding businesses whose profits arise outside Hong Kong, for owners who accept audited accounts every year.
A UAE company usually suits founders who move to the UAE and run the business from there, especially in a free zone where qualifying income can be taxed at 0%; the free zone regime has conditions of its own. Either way, where you live and manage the company decides much of the tax outcome, so take advice in your country of residence.
Hong Kong taxes only profits arising in or derived from Hong Kong, so profits earned abroad stay untaxed there, but every company except a dormant one is audited each year. The UAE taxes its resident companies on income from inside and outside the UAE, at 9% above AED 375,000, and a qualifying free zone company can pay 0% on qualifying income. Where the business is actually run decides which fits.
In the UAE, taxable income up to AED 375,000 is taxed at 0% and the rest at 9%. In Hong Kong, a corporation pays 8.25% on the first HK$2,000,000 of assessable profits and 16.5% above; within a group of connected entities only one nominated entity gets the lower rate.
A UAE company files its corporate tax return and pays within nine months after the end of its tax period. A Hong Kong company files a profits tax return and has its financial statements audited every year, unless it is dormant.
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