Yemen Tax & Business Guide - Deloite

Basic facts
Population 21.6m Inflation 21.6% (2006)
Main languages Arabic, English GDP per head US$898
Currency Yemeni riyal (YER) GDP growth 2.6% (2006)*
GDP sources 12.6% agriculture, 40.7% industry, 46.7% services
*Economist Intelligence Unit estimate.
Political environment

Yemen is a republic. A unicameral assembly is elected directly for a six-year term. The president, currently Ali Abdullah Saleh, is head of state. The Council of Ministers is headed by the prime minister, currently Abdel-Qader Ba-Jammal.
Foreign trade and investment
Exports US$7.3bn (2006)* Imports US$5.1bn (2006)*
*Economist Intelligence Unit estimates.

Leading export markets: China and the Middle East.

Major exports: Crude petroleum products, foodstuffs and hides.

Oil accounts for 90% of exports and 70-75% of government revenue.
Business and financing
Business forms Limited liability company, joint stock company, branch

Other forms of business organisation include a general partnership, limited partnership, company limited by shares and joint venture.

Foreign ownership in a company is limited to 49%, unless the project qualifies under the Investment Law for higher foreign ownership (that is, 100%).
Labour environment
Unemployment rate N/a Minimum wage See below

Minimum wages are provided for public-sector employment, but the wage allocations are complex, with multiple salary bands in use and variances between different departments.

Social security contributions must be paid to the authorities as follows: the employee pays 6% of the gross monthly salary and the employer 9% of the gross monthly salary.
Taxation
Corporate tax
Main rate 35%

Companies resident in Yemen are subject to tax on their worldwide income at a flat tax rate of 35%. A company is resident in Yemen if it is incorporated in Yemen or if it is incorporated under foreign laws but managed and controlled from Yemen. Non-resident companies are also subject to tax on Yemeni-source income at 35%.

Zakat is imposed only on companies and establishments with Muslim partners, and is calculated at a rate 2.5%, either based on the working capital or on equity minus fixed assets.
Individual tax
Salary tax levied on monthly taxable income relating to wages

Individuals are subject to salary tax, levied on monthly taxable income relating to wages, salaries and benefits. The monthly salary tax is YER 2,650 for the first YER 22,000 or its equivalent, and 20% on the amount exceeding YER 22,000.
Capital gains
Company gains taxed as income

Capital gains of companies are included in taxable income and taxed at the normal rates. However, a property capital gains tax is levied at a rate of 3%.
Indirect tax
Sales tax at 5Ò8%

A sales tax of 5Ò8% is levied on all goods and services provided in Yemen from July 1st 2005. Exemptions apply to certain essential goods and services.
Tax administration and compliance
Tax year Corporations: calendar year; Individuals: calendar year

The tax year-end is December 31st, unless otherwise stated in the companyÌs articles of incorporation. An annual corporate tax return, attested by an auditor, must be filed and the corresponding tax paid by April 30th of each year. Penalties apply for failure to comply.
Additional tax information
Withholding taxes Payment for services provided by non-residents 10%; supply of equipment 3%.
Tax treaties Yemen has concluded more than ten tax treaties.
Dividends Dividends received by companies are taxed as normal income. Dividends received by individuals, both resident and non-resident, from both resident and non-resident companies, are not subject to tax.
Revenue protection There is no transfer-pricing or anti-haven (CFC) legislation.
Groups There is no provision for group taxation.
Incentives Free zones; investment protection treaties; investment law.
Other taxes Zakat, Real estate taxes, Revenue stamp tax, Amusement tax, Tax on income from non-industrial and non-commercial professions.