Taxes in Yemen

The main income-tax framework is Law No. 17/2010, which replaced Law No. 31/1991 and took effect on 31 December 2010. General Sales Tax is governed by Law No. 19/2001, as amended by Law No. 42/2005. The Ministry of Finance, the Tax Authority and its General Taxation Department (GTD), Yemen Customs Authority (YCA), governorate branches and Local Councils perform different functions. Taxpayers may also encounter tax and customs administrations aligned with the Sana'a authorities or with the internationally recognized government, whose administrative center is in Aden. tax.gov.ye publishes legislation, forms and electronic services, but a single nationwide real-time procedure has not been established in practice. A resident individual generally includes a person with a permanent home in Yemen, a person present for at least 183 days during a 12-month period, or a Yemeni working abroad who earns Yemen-source income. For resident individuals and small businesses, the stated annual exempt amount is YR 120,000; the next YR 120,000 is taxed at 10%, the next YR 600,000 at 15% and income above YR 840,000 at 20%. Payroll tax is calculated monthly using one-twelfth of the annual amounts and generally reaches a maximum rate of 15%. Other taxable benefits and bonuses are generally taxed at 15%, while a non-resident individual is generally taxed at 20%. The employer withholds payroll tax and submits the declaration and payment by the tenth day of the following month. A resident legal person is generally assessed on income inside and outside Yemen. A non-resident is assessed on Yemen-source income or income connected with a permanent establishment in Yemen. A permanent establishment can include a head office, branch, sales outlet, office, factory, mine, oil or gas field, or construction site. The general legal-person rate is 20%. Special rates include 35% or more for oil, gas and mining activities according to the applicable contract, 50% for mobile telecommunications, and 35% for international telecommunications and cigarettes. A qualified investment project may qualify for a 15% rate only when it meets all stated conditions, including at least USD 3,000,000 in capital, at least 100 employees, proper books, an auditor, a licence and regular payroll submissions. Oil, gas and mining projects, banks and insurers, import and wholesale or retail trading, communications businesses and other excluded activities do not qualify under that investment provision. For small enterprises, Law No. 17/2010 uses turnover-based tax bases of 10% for trade, industry and construction, 20% for services and professions, and 5% for basic foodstuffs excluding imports. The Sana'a-side Law No. 8/2020 provides an exemption for businesses with annual turnover up to YR 20,000,000 and for small property rentals up to YR 50,000 per month, but excludes activities such as imports, money exchange and transfers, supplies and contracting, gold and jewellery, and several professional and foreign-person activities. A business still has to report its status or submit the required declaration. The application of those Sana'a-side rules outside the relevant administrative area has not been independently established. General Sales Tax is normally 5% on taxable goods and services, whether supplied locally or imported. Import sales tax is collected during customs clearance. The statutory registration threshold is at least YR 50,000,000, while exemption and zero-rating depend on the applicable goods and services tables. IMF proposals from 2025 concerning threshold changes, refunds, excise taxes and harmonized import or advance rates are proposals rather than confirmed legislation and should not be treated as current law. A business generally has to report its start, a new branch or office, or a change of head office within 30 days. Registration produces a Tax ID and Tax Card, and the Tax Card is renewed annually after the tax declaration has been filed. The card can be required for contracts, public procurement, supplies and work permits. Companies and professionals should retain books, records, invoices and financial data. Online registration, monthly electronic returns and electronic payment are officially offered, but their practical availability depends on the area and administrative authority. Trade and industrial businesses, professionals and property activities generally file the annual return by 30 April for the preceding year and pay at the same time under self-assessment. Early filing and payment may produce a discount of 1.5% in January, 1% in February or 0.5% in March. Foreign withholding-tax payments are generally due within 15 days. A property-transfer return is generally due within four months after the sale or other disposal. A foreign taxpayer planning to leave Yemen may need to obtain clearance 60 days before departure. A return after death is generally due within 90 days, and a business ending operations or entering liquidation generally has 60 days to file. An annual filing extension may reach 30 days if requested at least 15 days before the deadline; the payment deadline does not change. The Tax Authority may estimate the tax when a required return is missing. A timely return is generally subject to review within two years, while an additional assessment can generally be issued within three years after the authority becomes aware of concealed information or evasion. The taxpayer remains responsible for the accuracy of the return, and the authority may inspect books and financial data subject to statutory confidentiality rules. A written objection to an assessment is generally filed within 30 days of the notice, with a possible additional 15-day period. A Settlement Committee may review the dispute, followed by an Appeal Committee within 30 days after its decision, or a direct appeal within 60 days where that procedure applies. The taxpayer may submit documents and other evidence. A final assessment is generally payable within 20 days. A refund of an overpayment may be available within 40 days after a written application, provided the application is made within five years. An approved instalment arrangement may run for up to three years, and a deadline falling on a holiday moves to the next working day. Property income and transfers have separate rules. For a natural person, the stated real-estate rental tax is one month of rent per year, while an ownership transfer is taxed at 1% of the total value or price. The landlord, tenant, real-estate office or notary generally reports the start of a lease within 60 days. The annual property return is generally due by 30 April and includes a copy of the lease and the rent actually received. Yemen applies a source-based approach to cross-border taxation. Yemen-source income can include services performed in Yemen, payments by a resident employer even when the employee works abroad, permanent-establishment activity, real estate, dividends from a resident company and royalties or licence income. A resident legal person may generally credit foreign income tax against Yemen tax up to the Yemen tax attributable to that foreign income, if it provides proof; foreign losses cannot generally be used to offset other income. Withholding tax is generally 10% on payments to a foreign agency or other non-resident for items such as proceeds, interest, royalties, services, technology, know-how and management, subject to stated exceptions including some interest paid through international financial institutions or authorized banks. Double-tax agreements may alter the result, but the current treaty list requires separate verification. A person leaving Yemen permanently may also need tax clearance or a guarantee. Economic and administrative fragmentation affects registration, payment, records and the recognition of tax already paid. Governorates aligned with the internationally recognized government may retain some revenue and apply different tax or customs rates, while processes can remain manual, digitization is limited and local influence risks are documented, especially for larger taxpayers. A company should identify the controlling authority for its operating area, port, governorate and checkpoint network before registering, paying or relying on a Tax Card. Nationwide recognition, crediting and protection against duplicate payment have not been established as a uniform practical outcome. Customs is primarily a border charge, although it intersects with import sales tax and international taxation; Zakat remains a separate religious obligation.