Two setups, one promise: zero percent. Some form a US LLC and live as nomads or expats somewhere their profit is not taxed. Others move to Dubai, form a free zone company and tell Instagram the Emirates are tax free. Both stories have been incomplete since June 2023, and one of them has become genuinely expensive. Here is the system comparison the salespeople on both sides do not write: with the 2026 figures, the conditions in the small print and an honest answer to the question of when Dubai still wins.
The two models in one paragraph each
The US LLC, as a single-member company, is a disregarded entity: for tax purposes the US treats it as nothing, and the profit counts directly as your income. If you live outside the US and the LLC has no effectively connected income, meaning no real domestic US business with its own presence, nobody pays US tax on the profit. Tax is paid where you are resident, and if your country of residence does not tax foreign income, or you are a perpetual traveller who never stays anywhere long enough, the end result is a genuine zero. The obligations are manageable but relentless: once a year Form 5472 with a pro forma 1120, plus the Registered Agent and the annual report in the state. According to the IRS instructions, the penalty for a forgotten form is 25,000 dollars; that is the one point where this structure has no sense of humour.
The Dubai free zone company is the opposite model: a real corporation in one of the Emirates' more than forty special economic zones, with a trade licence, a flexi desk and the real crown jewel that no LLC in the world offers: a residence permit. The company sponsors your residence visa, and your Emirates ID, bank account, apartment and daily life all hang on it. In return, it is a full taxable entity in a country that has levied corporate tax since 1 June 2023. Anyone still selling you "Dubai is tax free" in 2026 has missed the last three years of legislation.
Dubai in 2026: what is left of the zero
The basic mechanics: 9 percent corporate tax on profits, with the first AED 375,000 (around 93,000 euros) staying at 0 percent. On top of that there are two routes back to zero, both with conditions you need to know.
Route one: Small Business Relief. If revenue (not profit) stays below AED 3 million, the company can elect to be treated as if it had no taxable income. Freshly verified: at the end of July 2026 the Ministry of Finance extended this relief until the end of 2029 by Ministerial Decision No. 131; it would originally have expired at the end of 2026. The catch: the threshold is cumulative. Exceed AED 3 million once, in any period since the tax was introduced, and the election is gone for good. And if you elect the relief, you still have to be registered and file returns.
Route two: Qualifying Free Zone Person status, the much-quoted 0 percent regime of the free zones. It exists, but it is a package of conditions, not an automatic right. The company needs adequate substance in the free zone (real activity, adequate staff and expenditure there); it must earn its income from qualifying activities, which according to PwC's overview of the free zone rules mainly means business with other free zone companies and with foreign parties; it must not breach the de minimis limit for non-qualifying income (the lower of 5 percent of revenue or AED 5 million); it must follow transfer pricing rules; and it must present audited financial statements, auditor included. If one condition fails, the status fails, for the current period plus the four following ones: five years of 9 percent on everything. Incidentally, the typical solo service provider with clients in Europe often does not meet the qualifying criteria at all; their income is then simply ordinary income, taxable above AED 375,000.
Two bits of tidying up on the side: the old Economic Substance Regulations, with their notifications and reports, were abolished by Cabinet Decision No. 98 of 2024 for financial years after 2022, but the substance requirement lives on in corporate tax law for Qualifying Free Zone Persons. And there is a general corporate tax registration requirement: every company with a licence, including a free zone company with zero profit, and natural persons with business revenue from AED 1 million, according to the Federal Tax Authority. Late registration costs a penalty of AED 10,000; the amnesty windows for it have now largely closed. So Dubai is no longer the country without a tax administration; it is a country with a young, digital and increasingly thorough tax administration.
The 90-day myth
No Dubai topic produces more half-knowledge than residence. The legal position since March 2023: the Emirates issue a Tax Residency Certificate under three alternative tests. 183 days of physical presence in twelve months; or 90 days plus a residence visa plus a permanent place of residence or a job or business in the Emirates; or your main residence, with the centre of your financial and personal interests, is there.
The myth turns that into: "90 days in Dubai a year and you're tax free." That confuses two questions. The 90-day rule only answers when the Emirates certify you as resident. It does not answer whether your previous country, or another one, lets you go: if you spend the rest of the year with an apartment, family or centre of life elsewhere, you usually remain taxable there under that country's law, and in a conflict, residence rules decide, against which a certificate from Dubai is no trump card. The Emirates' tax freedom goes to people who really live there, not to people who winter there three times a year. The same logic we took apart in the 183-day article, just with sand.
The cost reality: an order of magnitude apart
Now for the chapter that tends to vanish behind renderings of rooftop pools in Dubai sales pitches.
Dubai, honestly calculated: A low-cost free zone licence (IFZA, RAKEZ, Sharjah and the like) starts at around AED 12,900 in 2026, but that is the bare-bones price. If you use the setup for what it is for, namely living there, you need an establishment card (around AED 2,000 to 3,000), the visa process with medical check and Emirates ID (AED 3,000 to 5,000 per person), mandatory health insurance and the flexi desk that is part of the package in many zones. Realistically, a solo founder with one visa ends up at AED 25,000 to 30,000 in the first year, around 6,500 to 7,500 euros, plus an agency mark-up if they don't do it themselves. After that, an annual licence renewal from about AED 13,000 and the visa cycle every two years. Then the new obligations: corporate tax registration, bookkeeping, tax return and, for Qualifying Free Zone Persons, the audited accounts. And life itself: for rent and daily life, Dubai is one of the most expensive cities in the region. If you expect 100,000 euros of profit, you can quickly spend ten percent of it here on the infrastructure of saving tax.
The LLC, honestly calculated: Formation and running costs play a league lower. State fees in Wyoming or New Mexico are in the double-digit to low three-digit dollar range per year, plus the Registered Agent and Form 5472 compliance. You will find our all-inclusive packages set out openly on the pricing page; in total they stay well below what the Dubai visa round alone costs. There is no mandatory audit, no revenue threshold with loss of status, no duty to be present in Cheyenne. The structural difference: the LLC does not cost you a move. It works from Lisbon, Kuala Lumpur, Asunción or a camper van, as long as your country of residence plays along.
Banking: advantage USA, honestly
When it comes to accounts, the cliché flips. A US LLC gets an account with fintechs such as Mercury or Relay remotely and within days, with US dollar accounts, virtual cards and an API. The Dubai company, on the other hand, meets banks that ask about substance, business plan and minimum balance: account opening there regularly takes weeks to months, especially for new free zone companies with a foreign shareholder and "consulting" on the licence, and many banks expect five- to six-figure minimum balances in AED. It works, tens of thousands of people do it, but it is a process, not an onboarding form. To be fair: the Emirates account then belongs to your residence and your Emirates ID, which makes a stable overall package. The LLC fintechs, for their part, want to see a real, plausible business; letterbox setups get thrown out there too.
The honest matrix
Dubai wins if you need a residence permit. This is the point no LLC calculation, however attractive, can argue away: the LLC gives you no visa, no residence and no right to stay, anywhere. It is a company, not a centre of life. If you want to solve your tax question by really emigrating, and you are looking for a country that gives entrepreneurs a residence permit quickly and predictably, the Emirates give you both from one source: a company plus a visa plus zero income tax on salary and dividends. Dubai also wins if your clients are in the Gulf, if you need local staff, a warehouse or a shop, or if on principle you want no US structure.
The LLC wins if you have already solved the residence question or want to solve it differently. If you already live in Paraguay, Panama, Malaysia or another country that does not tax foreign income, or travel as a nomad, you do not need a second residence in the Gulf but a light, cheap, clean vehicle for invoices, payments and liability protection. That is exactly what the LLC is: a fraction of the cost, no obligation to publish accounts, no audit, no sword of Damocles over your status, banking within days. And it forces nothing on you: you can live in Georgia today and in Uruguay next year, and the structure simply moves with you.
The combination often beats both, but not as a tax trick. A Dubai residence plus a US LLC is a popular setup, it just works differently from what the reels claim: an LLC you run from Dubai counts as resident there through its management and slides into corporate tax; we dissected the details in the Dubai illusion article. The combination works as a toolbox (US banking, dollar invoices, liability protection) built on the Emirates' rules, not around them. If you are interested in the EU version of the comparison instead, you will find the Cypriot limited company in the companion article.
And if you still live in a high-tax country?
Briefly and defensively, because this question comes up in every second first call: as long as you still live in your old country, neither a free zone company nor an LLC changes anything about your tax liability there. "Tax free in Dubai" without actually moving remains a headline without a legal basis. Both setups in this article are tools for after you have moved away, not for your kitchen table at home.
Your next step
If your residence plan is in place and the matrix above points to the LLC: choose your state and have it formed; we have been doing this in the United States since 2008. If you are torn between Dubai, the LLC or the combination, or your emigration destination itself is still open, book a consultation with Sebastian: one hour, held in English, honest feedback on your specific case, 15-minute guarantee.
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ZeroTax LLC is a service of Mount Bonnell Advisors in Austin, Texas.
Founder of Mount Bonnell Advisors, Austin, Texas. Has accompanied clients to Dubai and back again, and recommends the city to anyone who likes it, just not as a tax trick for 90 days a year.
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