US LLC vs Dubai vs Hong Kong: which one actually fits

Every founder who works from more than one country ends up in the same conversation. Somebody in a group chat swears by a Dubai free zone. Somebody else runs everything through a Wyoming LLC for $60 a year. A third has a Hong Kong company because their suppliers are in Shenzhen. All three are convinced the other two are making an expensive mistake.

They can all be right, because they are not answering the same question. A company is a container for revenue and liability. It is not, on its own, a tax plan. What you pay is decided by where the work is done, where you are resident, and where your customers are — and only then by the flag on the certificate.

So here is what each of the three is actually good at, what each one costs to keep alive, and where each one quietly bites.

The short version

The US LLC

A single-member LLC formed in Wyoming, New Mexico or Delaware is the cheapest credible company an internationally mobile founder can own. You can have one in under a week without leaving your desk, and keeping it alive costs less than a phone plan.

What you get

• A real, boring, universally recognised entity. Stripe, Shopify, Apple, Google, App Store payouts and virtually every SaaS vendor already have a US-entity path.
• Limited liability at a serious price point — from around $100 in state filing fees, plus a registered agent.
• No audit, no company secretary, no minimum capital, no local director.
• Invoicing in USD from a US entity, which removes a surprising amount of friction with US and Latin American clients.

What it actually costs to run

Wyoming charges a $60 minimum annual report. Delaware charges a $300 franchise tax and expects it in June. A registered agent runs $50–150 a year. That is the whole recurring bill in most years.

The one that catches people is federal: a foreign-owned single-member LLC must file Form 5472 with a pro forma Form 1120 every year, even with zero revenue and zero tax due. The penalty for not filing is $25,000. It is not a tax return in any meaningful sense — it's an information return about transactions between you and your own company — but the IRS treats a missed one seriously.

Where it bites

• It confers nothing personal. No visa, no residency, no tax residency certificate. If your home country still considers you resident, an LLC changes nothing about your personal tax bill.
• Effectively connected income. If you have people, an office or dependent agents in the US, profits can become US-taxable. Selling *to* Americans from abroad is usually fine; *operating* in the US is a different question and deserves a real adviser.
• Banking is the weak point. Fintech accounts open in days. A traditional US bank account without ever setting foot in the country is genuinely hard, and some nationalities face flat refusals.
• Some counterparties dislike a two-week-old Wyoming LLC. Enterprise procurement occasionally asks awkward questions.

Pick it if you sell digital products or services, your customers are anywhere, and you have already sorted out — or are about to sort out — where *you* are tax resident.

The UAE free zone company

Dubai is not really being sold as a company. It is being sold as a residency with a company stapled to it, and that is the right way to evaluate it. A free-zone licence gets you a residence visa, an Emirates ID, a genuine local bank account and a plausible answer to "where do you live?" that most tax authorities will engage with.

The 9% that surprised everyone

The UAE introduced federal corporate tax in June 2023: 0% on the first AED 375,000 of taxable profit and 9% above it. Free-zone companies can still reach 0% as a Qualifying Free Zone Person, but the qualifying conditions are real — adequate substance in the zone, qualifying income categories, audited financial statements, transfer pricing documentation, and no election out.

Small Business Relief has let entities under AED 3m in revenue elect to be treated as having no taxable income, but it is a time-limited measure and you should check whether it still applies before you build a plan on it.

What it really costs

Licence packages start around AED 12,000–15,000 and climb quickly once you add visa quota, establishment card, medical, Emirates ID and mandatory health insurance. A realistic first year including one visa is $8,000–15,000. Renewals settle around $4,000–8,000, before an accountant and audit.

Add the part nobody quotes: you have to physically go. Visa stamping, medical and biometrics all happen in person, and the visa lapses if you stay outside the UAE for more than six consecutive months.

Where it bites

• Cost floor. Below roughly $150k of profit, the annual upkeep eats the tax saving.
• Substance expectations are rising. A flexi-desk you have never visited is a weaker position each year, not a stronger one.
• Banking before residency is slow. Local banks want the Emirates ID first. Budget one to three months.
• Your old country may not let go quietly. A UAE visa alone does not end tax residency somewhere with a family home, a spouse and a centre of vital interests.

Pick it if you are genuinely willing to live there part of the year, you want a residency and a company solved together, and your profit is large enough that the upkeep is noise.

The Hong Kong limited company

Hong Kong is the grown-up of the three. Common law, English-language filings, a mature courts system, and a reputation that opens doors across Asia. Profits tax is territorial and two-tiered: 8.25% on the first HKD 2 million of assessable profits and 16.5% above.

The offshore claim

Profits not sourced in Hong Kong can, in principle, escape profits tax entirely. This is what people mean when they call Hong Kong tax-free — but it is a claim you file and defend, not a default. The Inland Revenue Department asks where contracts are negotiated and concluded, where the people are, and where the value is created. Answering "nowhere in particular" is not a strategy, and foreign-sourced income rules have tightened considerably.

The audit is not optional

Every Hong Kong company files audited financial statements signed by a local CPA, every year, dormant or not. Budget $1,200–3,000 for audit and filing, plus a company secretary and registered office at $500–1,000. Formation itself is $1,200–2,500 including the business registration fee.

Where it bites

• Banking is the single hardest thing on this page. Traditional Hong Kong banks routinely decline companies whose directors do not live in the region. Most non-resident founders end up on a fintech such as Airwallex or Statrys — perfectly workable, but plan for it from day one rather than discovering it later.
• The audit requirement is a fixed cost floor that does not care whether you invoiced anything.
• Filing deadlines are strict and the profits tax return arrives on the IRD's schedule, not yours.

Pick it if you trade physical goods with Asia, your suppliers or customers expect a Hong Kong counterparty, or you want a structure that reads as substantial to institutional partners.

The question that decides it

None of the three answers the only question that changes your tax bill: where are you personally tax resident, and what does that country do to profits sitting in a foreign company you control?

If you are still resident in Germany, Spain, the UK, Australia or most of the OECD, controlled foreign company rules can attribute your Dubai or Hong Kong profits back to you personally, taxed at your domestic rate, whether or not you ever pay yourself a dividend. Place-of-effective-management rules can go further and treat the company itself as resident where you sit when you make decisions. In that scenario, all three options above produce the same outcome: you pay at home, plus the cost of the structure.

Fix your personal residency first. Then choose the company. Doing it in the other order is the single most expensive sequencing error we see.

And if you are a US citizen or green card holder, none of this applies in the way you have been told. Citizenship-based taxation follows you everywhere, GILTI and Subpart F apply to foreign companies you control, and a US LLC is usually the *simplest* structure rather than the cleverest one. Talk to a US-qualified adviser before anything else.

So which one

The unglamorous answer is that most founders reading this should form a US LLC, spend the money they saved on sorting out their personal residency properly, and revisit the question when profit justifies complexity. A structure you can explain in one sentence and afford to maintain forever beats a clever one you abandon in year two.