🇾🇪 Yemen Tax Guide — Income, Corporate & VAT Rates

The tax rates in Yemen range from 10% to 20% for personal income, with a corporate tax rate of 20% and a standard VAT rate of 5%, and expats need to understand the country's tax system, including residency rules and tax treaty network, to navigate their tax obligations.

Tax System Overview

Yemen has a territorial taxation system, where individuals and businesses are taxed on their income earned within the country, regardless of their residence status. However, worldwide taxation may apply to Yemeni citizens and residents who earn income from foreign sources. To be considered a tax resident in Yemen, an individual must have a permanent home in the country or stay in the country for more than 183 days in a calendar year. The tax system in Yemen is governed by the Income Tax Law and the Tax Authority is responsible for collecting taxes and ensuring compliance.

The tax authorities in Yemen also consider other factors, such as the individual's economic ties to the country, when determining tax residency. Foreigners who work in Yemen are required to obtain a tax card from the Tax Authority, which is necessary for filing tax returns and claiming tax exemptions. Taxpayers in Yemen can file their tax returns electronically or manually, and the Tax Authority provides guidance and support to help taxpayers comply with their tax obligations.

Personal Income Tax

Corporate & Business Tax

• The corporate tax rate in Yemen is 20% of the company's taxable profit.
• Small businesses with an annual turnover of less than YER 10 million are exempt from corporate tax.
• Companies operating in free zones are eligible for tax exemptions and other incentives, such as customs duty exemptions and streamlined registration procedures.
• Foreign companies must register with the Tax Authority and obtain a tax card to operate in Yemen.
• Companies are required to file their tax returns and pay taxes within three months of the end of the tax year.

VAT / Sales Tax

• The standard VAT rate in Yemen is 5% of the taxable value of goods and services.
• Reduced rates of 0% and 2% apply to certain goods and services, such as basic food items and pharmaceuticals.
• Exemptions apply to certain goods and services, such as financial services and healthcare services.
• There are no tourist refund schemes in place for VAT paid by tourists in Yemen.

For Expats & Foreign Workers

• Tax residency rules apply to foreigners who work in Yemen, and they are required to obtain a tax card and file tax returns.
• Yemen has double taxation treaties with six countries, including Saudi Arabia and Oman, to avoid taxing the same income twice.
• Foreign workers are required to contribute to the social security fund, which provides benefits such as pension and health insurance.
• Remittance rules apply to foreign workers who send money out of the country, and they are required to declare their income and pay taxes on it.
• Foreigners who work in Yemen are also required to obtain a work permit and register with the Ministry of Labor.
• Foreign workers may be eligible for tax credits for taxes paid in their home country, but this is subject to certain conditions and limitations.

Crypto & Investment Income

• Investment income, such as dividends and interest, is subject to income tax in Yemen.
• Capital gains tax is included in the income tax and is subject to the same rates and exemptions.
• Cryptocurrency is not specifically regulated in Yemen, but it is considered a commodity and subject to income tax.
• Taxpayers are required to declare their investment income and pay taxes on it, and failure to do so may result in penalties and interest.