Yemen taxes residents on worldwide income and non-residents on Yemen-source income only. Yemen's tax administration capacity has been significantly affected by ongoing conflict, with parallel administrative structures operating in different parts of the country.
The Yemeni tax year is the calendar year.
20% flat standard rate (35% for telecoms, 50% for petroleum sector production-sharing income); civil conflict has significantly disrupted formal enforcement and split governance affects administration.
Progressive 10% to 15% (some sources cite up to 20%) under Income Tax Law 17/2010, with an annual exemption of YER 120,000.
5% General Sales Tax.
An individual is tax resident in Yemen if (a) maintaining a residence in Yemen, or (b) physically present 183 days or more. Residents are taxed on worldwide income. A corporation is resident if registered under Yemen's company regulations, headquartered in Yemen, has its place of business or management in Yemen, is an economic sector unit with 50% or more state ownership, or is a concession company operating in Yemen.
A non-Yemeni entity has a Yemen permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Yemen on the entity's behalf, assessed under Yemeni domestic law as currently administered in the relevant region.
Yemen's tax legislation does include anti-avoidance provisions covering transfer pricing, thin capitalization, and Controlled Foreign Company rules. Specific attribution thresholds and mechanics are not further itemized in available sources.
A thin capitalization rule exists as part of Yemen's broader anti-avoidance framework under Income Tax Law No. 17 of 2010.
Yemen does not use an elective check-the-box classification system. Yemen does not have a comprehensive ATAD2-style anti-hybrid regime.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Per Moore Global's Yemen tax guide, dividend income received by a legal entity from a public company is tax-exempt, provided the paying company's income was already taxed - a domestic dividend exemption preventing double taxation at the corporate level, though a broader exemption specific to foreign-sourced dividends is not separately confirmed.
Per Moore Global's Yemen tax guide, a Yemeni resident may deduct foreign tax actually paid overseas from the tax payable under the Income Tax Law - a real statutory foreign tax credit mechanism, though administrative fragmentation from the ongoing conflict may affect its practical operation.
Yemen has approximately 6 active double tax treaties. Yemen has not signed the OECD's Multilateral Convention (MLI). This is a genuinely narrow network, and the ongoing conflict and parallel-administration situation may affect the practical operation of some treaty relationships independent of their formal legal status.