UAE company, Hong Kong owner: five things to get right

Hong Kong owners often hold a UAE company directly or through a Hong Kong company. The UAE side can usually be run remotely; Hong Kong's source rules and the foreign-sourced income exemption (FSIE) regime decide what happens at home.

Five things to get right

1. Your UAE company is UAE resident for Corporate Tax wherever you live: it registers, keeps records for seven years and files an annual return, and a free zone company keeps the 0% rate only if it meets every Qualifying Free Zone Person condition, including substance in the free zone and audited financial statements.
2. Hong Kong taxes profits sourced in Hong Kong from a business carried on there — for residents and non-residents alike.
3. Under the UAE–Hong Kong agreement, a company resident in both places is resident where its place of effective management is.
4. If a Hong Kong company holds the UAE company, UAE dividends received in Hong Kong fall under the FSIE regime; the UAE's 9% rate (or 0% for a Qualifying Free Zone Person) does not normally meet the 15% condition of the participation exemption, so economic substance in Hong Kong usually matters.
5. Individuals in Hong Kong are not taxed on dividends, and the FSIE regime does not apply to them.

Keeping it transparent from Hong Kong

Our clients abroad use a client portal to send documents and see their filings, receive a monthly report pack with their profit and loss, balance sheet, VAT and Corporate Tax position and upcoming deadlines, and have scheduled calls with their named accountant at times that suit Hong Kong. Nothing is filed without their approval.

We advise on UAE tax and work alongside your Hong Kong adviser on the Hong Kong side. For the full picture, see UAE company accounting for owners in Hong Kong.

The Hong Kong points above are general information; please confirm your own position with a qualified Hong Kong adviser. Sources are listed on the linked page.