Business Structures in Yemen

Choosing the right business structure is a critical decision for anyone starting a business in Yemen. This guide compares the available structures and their tax implications.

Limited Liability Company (LLC)

The LLC is the most popular business structure in Yemen, offering limited liability protection:

• Minimum Capital: No statutory minimum
• Ownership: 1-50 shareholders
• Management: One or more managers
• Liability: Limited to contributed capital
• Tax: Subject to CIT at 20%
• Audit: Required for larger LLCs

Joint Stock Company (JSC)

Suitable for larger businesses and public offerings:

• Minimum Capital: YER 10,000,000
• Ownership: Minimum 3 shareholders, no maximum
• Management: Board of directors (minimum 3)
• Liability: Limited to share value
• Tax: Subject to CIT at 20%
• Audit: Mandatory annual audit

Branch of Foreign Company

Foreign entities can operate through a branch:

• Registration: Foreign company must register with authorities
• Local Agent: Required
• Liability: Parent company bears full liability
• Tax: Subject to CIT at 20% on Yemen-source income

Sole Proprietorship

Simplest form for individual entrepreneurs:

• Registration: Simple procedure
• Liability: Unlimited personal liability
• Tax: Income taxed at progressive PIT rates (0-35%)
• Ideal For: Small businesses, freelancers

Partnership

General partnerships are available but less common:

• Partners: Minimum 2
• Liability: Unlimited joint liability
• Tax: Each partner taxed individually at PIT rates

Tax Implications by Structure