In the first part of this columnI looked at the operational aspect of the choice between Dubai and Hong Kong such as licensing, regulatory models, access to banking, and the difference between quick market entry and institutional depth. Drawing on Change nowDrawing on our own research and practical experience in these markets, this second part continues this analysis by looking beyond incorporation and licensing.
But for founders, the center’s decision does not end once the company is established or a license is obtained. The real test comes later, when tax residence, the substance of the company, minimum global tax rules, exposure to sanctions, and ongoing due diligence of partners all start to factor in and determine whether the entire structure will actually hold up over time.
The tax question is misunderstood by most founders
The UAE tax story is often sold as simple – 9% Corporate tax over AED 375,000, small business exemption, and no personal income tax. In fact, it’s cleaner on paper than it is in practice.
For individuals, the UAE does not impose a traditional personal income tax. But this does not automatically resolve the issue of tax residency for international mobile telecommunications founders. According to the decision of the Council of Ministers No. 85 Under the 2022 Act, an individual may be treated as a UAE tax resident if, among other things, he spends at least 183 days in the UAE during a relevant 12-month period, or if his usual or primary place of residence and the center of his financial and personal interests is located in the UAE. So a visa alone does not do the job. This is especially important for mobile founders who split time across jurisdictions.
In contrast, Hong Kong imposes regional taxes system – Only income from Hong Kong sources is taxed. Individuals are generally not taxed based solely on their presence, and founders who do not perform services in Hong Kong typically do not owe any payroll tax, regardless of the time they spend in the city. This source-based approach is often underestimated in major price comparisons.
In terms of corporate taxes, the UAE’s advantage becomes more complex after Pillar 2. The main domestic corporate tax rate remains low, and the small business exemption may continue to reduce the burden on eligible resident companies with revenues not exceeding AED 3 million, although this exemption only applies to tax periods ending on or before December 31 2026. However, for large multinational groups, the UAE has already implemented the local minimum surtax, which applies to financial years beginning on or after 1 January 2025, and applies to multinational groups with annual global revenues of 2026. 750 million euros Or more. The UAE has not implemented the income inclusion rule at this stage, but the additional tax no longer poses a theoretical future risk.
Hong Kong has moved in the same global direction, but under a clearer legislative framework. The Inland Revenue (Amendment) (Minimum Taxation for Multinational Enterprise Groups) Code, 2025 was enacted in June 6 2025, implementing GloBE rules and minimum additional taxes in Hong Kong for in-band multinational groups from 2025 onwards.
The UAE may still look lighter on paper, but future additional taxes could narrow the gap. Hong Kong, despite its higher nominal tax environment, offers something that large institutions often value more than the headline rate – predictability. In other words, Dubai may be cheaper today, but Hong Kong may be easier to emulate tomorrow.
Why geopolitics matters more than tax rates
The UAE’s removal from the FATF gray list in February 2024 did more than just clean up its compliance file. We have facilitated the selling process in Dubai for banks, investors and risk committees. But this does not mean that Dubai is a sanctions-free zone – banks there are very sensitive to US Treasury enforcement – but it provides a degree of judicial impartiality that Hong Kong cannot emulate.
For B2B cryptocurrency companies, geopolitics goes beyond where founders choose to live. It feeds into how partners assess risk, how treasuries are routed, how clients come on board, what exposure to sanctions looks like, and whether counterparties want to do business with you in the first place.
For a founder whose personal safety, protection of assets, or ability to travel depends on the perceived neutrality of his base, Dubai’s foreign policy stance is a structural advantage.
Are there inflated startup numbers in Dubai?
The publicly announced figure for DMCC is more than 26000 The registered companies, including several hundred in its crypto center, cannot be directly interpreted as a number of active startups. A free zone license, upon establishment, does not require proof of ongoing business activity. However, companies are still subject to economic substance requirements and regulatory obligations depending on the type of license and classification of activity under the UAE corporate tax and compliance frameworks.
Industry reports on startup ecosystems, such as CV VC’s Crypto Valley researchexplain that legal entities are usually a lagging indicator when trying to measure the size of an industry. Activity-based metrics, such as developer engagement or cross-chain usage and product engagement, tend to give a more accurate read on where real economic activity actually is.
There is no audited public data showing how many DMCC-registered entities are actually active versus dormant, but if you talk to corporate service providers in free zones in the UAE, you get a largely consistent picture, with a significant portion of those entities being used primarily for holding structures, visa sponsorship or intellectual property arrangements, rather than active trading operations.
Even under conservative assumptions, the number of companies active in the DMCC tech and cryptocurrency ecosystem is still a meaningful group by global standards.
In contrast, virtual asset platforms licensed by the SFC in Hong Kong operate within a fully regulated framework. Licensed entities are required to maintain operational business infrastructure, comply with custody and segregation requirements for client assets, and implement full AML/KYC and compliance functions as part of their ongoing licensing obligations.
As a result, while the DMCC reflects a broader incorporation-based ecosystem, the Hong Kong-licensed group reflects a narrower but fully regulated set of operating entities subject to securities-style supervision.
Five tips for B2B crypto players
1. Time to market is now a key competitive metric.
Obtaining a license in two months versus twelve months can make a real difference to your runway, how trusted investors are, and your overall business appeal. For B2B companies in particular, delays in licensing delay everything else – partnerships, banking conversations, integrations, and ultimately revenue.
2. Bankability is as important as licensing.
A license may get your foot in the door, but that doesn’t automatically mean you’ll have efficient banking services. Before choosing a jurisdiction, firms really need to know if they can already access paper trails, manage treasury, handle partner settlements, and pass enhanced due diligence.
3. Institutional credibility comes at a price.
Hong Kong’s framework is slower and more demanding, but the regulatory signal may be valuable for firms targeting asset managers, banks, professional investors and regulated counterparties. Dubai is faster, but companies may need to work harder to demonstrate institutional depth.
4. Tax efficiency must match substance.
Lower tax rates will only be beneficial if the structure is defensible. Residence, source of income, economic substance, and administrative oversight are all important. For B2B companies, tax uncertainty can become an issue during banking, audits, fundraising or partner onboarding.
5. The single headquarters model is over.
Treasury may be based in Dubai, engineering may remain in Hong Kong or Shenzhen, legal headquarters may be elsewhere, and clients may be served in several regions. The real advantage goes to companies that know how to integrate licensing, banking, tax, compliance and commercial access into one cohesive operating package.
conclusion
The lesson here, in practical terms, is not that founders need to choose Dubai over Hong Kong, or Hong Kong over Dubai. It’s that jurisdictional decisions should be made based on a company’s immediate priorities, not a fixed idea of where the cryptocurrency business is supposed to be.
Speed, affordability, founder mobility, and access to funding may be priorities for early-stage companies. A more sophisticated operator will be more concerned with institutional counterparties, regulatory recognition, auditability, and long-term tax certainty. So the right response could change if a company raises money, enters new markets, grows its customer base, or moves to more stringently regulated products.
Licensing itself should be viewed as a tool for the business and not as the core of the entire organization. Being licensed in a market does not necessarily mean that all employees, executives, technical functions or business relationships must be located there. Teams can be created based on access to people, customers, infrastructure and operational effectiveness, rather than the title printed on a regulatory approval.
This flexibility is important because tax efficiency, reliability and speed do not usually go together. The best operators will be those who know what priority is most important at each moment, choose their jurisdiction accordingly, and are willing to reconsider that choice as the business evolves.
In this sense, what really matters is not staying stuck forever in the best cryptocurrency position. It’s knowing when a particular market has done its job and when the next stage of the organization needs something different.
