Personal Income Tax in Yemen
Yemen operates a progressive personal income tax (PIT) system with eight brackets for resident individuals on salaries and wages. The rates range from 0% to 35%, with a personal allowance of YER 600,000 per year. This guide explains how personal income is taxed in Yemen.
Tax Residency
An individual is considered a tax resident of Yemen if they meet any of the following criteria:
- Spend more than 183 days in Yemen in a calendar year
- Have their primary place of abode in Yemen
- Have their center of vital interests (economic and personal) in Yemen
Resident individuals are taxed on their worldwide income. Non-residents are taxed only on Yemen-source income.
Personal Income Tax Rates (2026)
Yemen uses a progressive tax rate structure for employment and business income. The rates are applied to annual taxable income after the personal allowance:
| Annual Taxable Income (YER) | Tax Rate |
|---|---|
| 0 – 600,000 | 0% (Personal Allowance) |
| 600,001 – 1,200,000 | 5% |
| 1,200,001 – 2,400,000 | 10% |
| 2,400,001 – 3,600,000 | 15% |
| 3,600,001 – 6,000,000 | 20% |
| 6,000,001 – 12,000,000 | 25% |
| 12,000,001 – 24,000,000 | 30% |
| Above 24,000,000 | 35% |
Personal Allowance
Every resident individual is entitled to a personal allowance of YER 600,000 per year. This is deducted from gross income before calculating tax. For employed individuals, the allowance is typically applied through the PAYE system.
Deductions and Allowances
Standard Deductions
- Social Security Contributions: Employee contributions (6%) are fully deductible
- Pension Contributions: Approved pension plan contributions
- Health Insurance: Premiums for approved health insurance plans
- Charitable Donations: To approved organizations
Employment Income
Employment income includes salaries, wages, bonuses, commissions, and benefits in kind. Employers are required to withhold PIT from employee salaries under the PAYE system and remit it to the tax authorities monthly.
Taxable Benefits in Kind
- Company car: Imputed value
- Housing: Market value of accommodation provided by employer
- Interest-free loans: Imputed interest
Filing Requirements
- Annual Tax Return: Due by March 31 of the following year
- PAYE Returns: Monthly, by the 15th of the following month
- Estimated Tax Payments: For self-employed individuals, quarterly installments
Penalties
- Late filing: 10% of tax due, plus 1% per month of delay
- Late payment: 0.5% per month of delay
- Understatement: 25% of understated tax
- Fraud: Up to 100% of tax evaded, plus criminal prosecution