Yemen personal income tax rates are up to 35%. Tax rates are:
- 10% to 20% for resident salaried individuals; and
- 10% to 35% for other taxpayers
Income Tax Rate
The first YR 36,000 Exempt (Per Year)
The next YR 48,000 10%
The next YR 180,000 15%
The next YR 180,000 20%
The next YR 180,000 25%
The next YR 180,000 30%
Over 804,001 35%
Basis - Income from employment, commercial or industrial activities and noncommercial activities (i.e. the exercise of a profession) if taxable income exceeds YER 36,000 per year.
Residence - An individual is resident in Yemen for a tax year if he/she is (1) a Yemeni national who has a permanent residence in Yemen or is present in Yemen for a period that in total is not less than 4 months in the tax year; (2) a national of an Arab country working in Yemen, irrespective of the period of residence; (3) a non-Yemeni national from a non-Arab country who has been resident in Yemen during the tax year for a period of not less in total than 4 months or has lived in Yemen for 2 consecutive months; or (4) a non-Yemeni national from a non-Arab country who is resident in Yemen, irrespective of the period of the residence, and is employed by a Yemeni corporation.
Tax Filing status - Joint tax returns are not permitted; each individual must file a separate tax return.
Taxable income - Resident individuals are taxed on income from employment, commercial or industrial activities and noncommercial activities (i.e. exercise of a profession) earned inside or outside Yemen. Nonresidents are taxed on their income in Yemen and arising from the carrying out of an activity or a profession or from an individual transaction, irrespective of the period in which transacted. Individuals are exempt from tax on income from treasury bonds, interest from bank deposits, savings in post offices and income from shares in public and shareholding companies.
Capital gains - No
Tax Deductions and tax allowances - Deductions and allowances are available for the nonsalaried class, but deductions for the salaried class are limited to the contribution made to social security.
Other taxes on individuals:
Capital duty - No
Stamp duty - No
Capital acquisitions tax - No
Inheritance/estate tax - No
Real property tax - An annual tax is levied on the rental value at the amount of 1 month's rent and a tax of 3% is levied on income from the sale of land and constructed property and land prepared for construction.
Net wealth/net worth tax - Zakat is levied on net worth at 2.5%.
Social security contributions - Employees (nationals and foreign) contribute 6% of their salary to GCSS. Foreign employees are allowed to withdraw the total contribution, subject to a deduction of 20% as a service charge, made by the employee and the employer to GCSS.
Yemen Tax year - Yemen tax year is the calendar year
Tax Filing and payment of tax - Tax returns must be filed with the tax authorities within 120 days from the end of the tax year with a tax declaration showing the profits or losses, accompanied by all supporting documentation. The taxpayer must submit this declaration even if the determination of the profits was estimated. For salaried individuals, the employer withholds tax from wages and pays it to the tax authorities within the first 10 days of the following month.
Penalties - The penalty for failure to file the tax return is 2% of the tax payable for each month of delay and 1.5% of the tax payable for failure to file a return.
The standard rate of corporate tax in Yemen is 35%.
The 35% corporate tax rate may reduce to 20% in 2011.
Concession companies engaged in the exploitation of oil and gas are required to pay a fixed tax, normally 3% on their expenditure during the exploration phase as per the relevant Production Sharing Agreement (PSA).
Residence - A corporation is resident if it is registered in accordance with the Regulations for Companies in the Republic of Yemen, headquartered in Yemen, an economic sector unit (public and mixed) in Yemen or a concession company operating in Yemen.
Basis - Resident companies are liable to tax on profits earned within or outside Yemen resulting from the activities of their head office in Yemen; nonresident companies pay tax on profits derived from Yemen and arising from the carrying out of an activity or profession or from an individual transaction, irrespective of the period in which it was transacted.
Taxable income - Corporation tax is imposed on taxable income, which consists of income from manufacturing, services and trading activities, less allowable deductions.
Taxation of dividends - There is no special treatment for dividends.
Capital gains - Capital gains are taxed as normal business income.
Losses - Losses may be carried forward up to 4 years. Loss carryback is not permitted.
Surtax - No
Alternative minimum tax - No
Foreign tax credit - No
Participation exemption - No
Holding company regime - No, but limited rules exist for companies wholly subject to Zakat.
Tax Incentives - Projects established under Investment Law No. 22/2002 and Free Zone Law No. 4/1993 enjoy an exemption from corporate income tax for 7 years and the specified term of the project, respectively. The Oil and Minerals Ministry must pay corporate tax, from its own share, on behalf of concession companies engaged in the exploitation of oil and gas, during their development phase, as per their relevant PSA.
Dividends - No
Interest - No
Royalties - No
Branch remittance tax - No
Other taxes on corporations:
Capital duty - No
Payroll tax - Payroll tax is imposed on slabs of income at rates ranging from 10% to 20%. The employer deducts tax from the payment of salaries and remits that amount to the government treasury on behalf of the employees. Companies also are required to pay an education cess of 1% of the total payroll to the Ministry of Vocation Training.
Real property tax - An annual tax is levied on the rental value of real property in an amount equal to 1 month's rent and a tax of 3% is levied on income from the sale of land and constructed property and land prepared for construction.
Social security contributions - The employer must contribute 9% of a national or foreign employee's salary to the General Corporation for Social Security (GCSS); the employee contributes 6%.
Stamp duty - No
Transfer tax - No
Other - Government agencies (ministries, government departments, public and semipublic establishments) are required to withhold 10% from payments made to subcontractors pending receipt of a tax clearance certificate issued by the Tax Department.
Transfer pricing - No
Thin capitalisation - No
Controlled foreign companies - No
Disclosure requirements - No
Yemen Tax year - Tax year in Yemen is calendar year. The taxable year of a taxpayer starts from the date it obtains a commercial registration or license unless other documents are produced to support a different date. A taxpayer may use another tax year in the following circumstances: (1) the taxpayer uses a different year approved by the Directorate prior to the effective date of the regulations; or (2) the taxpayer is a member of a group of companies or a branch of a foreign company that uses a different financial year.
Consolidated tax returns - Consolidated tax returns are not permitted; each company must file its own tax return.
Tax Filing requirements - Tax returns for a corporation must be filed with the tax authorities within 120 days from the end of the tax year. Taxpayers that maintain proper financial books require a certification on the correctness of the tax return by a licensed certified public accountant.
Penalties - The penalty for failure to file the tax return is 2% of the tax payable for each month of delay and 1.5% of the tax payable for failure to file a tax return.
Yemen operates a General Sales Tax (GST) system. The standard GST rate is 5%, although a 10% rate applies to telecommunications and GSM services.
GST Registration - Companies whose annual turnover exceeds YER 50 million or its equivalent are required to register for VAT purposes. Registration is voluntary where turnover is below this amount.
Filing and GST payment - The registered entity must submit a declaration of its sales taxes for each month within the first 21 days of the following month.
Income Tax Rate
Corporate Tax Rate
Sales Tax / GST Rate
Last Update: Nov 2010
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