Tax Treaties and Cross-Border Taxation in Yemen

Cross-border taxation in Yemen covers how the country taxes foreign investments, income from abroad, and transactions between related parties. Yemen has limited tax treaty coverage, primarily within the Arab League.

Withholding Taxes

Yemen imposes withholding tax on payments to non-residents:

Income Type Domestic Rate
Dividends 10%
Interest 10%
Royalties 20%
Service Fees Applicable rate

Tax Treaties (DTTs)

Yemen has limited double tax treaty coverage, primarily with Arab League countries. As of 2026, Yemen has signed tax treaties with a limited number of countries. Where treaties apply, they may reduce withholding tax rates and provide mechanisms for resolving double taxation disputes.

Transfer Pricing

Yemen follows the arm's length principle for related-party transactions. Transfer pricing documentation is required for transactions exceeding specified thresholds with related parties. The tax authorities may adjust prices that do not reflect arm's length conditions.

Foreign Tax Credit

Resident taxpayers can claim a foreign tax credit for taxes paid abroad on foreign-source income. The credit is limited to the Yemeni tax payable on that income.

Exchange of Information

Yemen participates in limited international tax cooperation. The country has signed Tax Information Exchange Agreements (TIEAs) with some countries.

Inbound Investment

Foreign investors in Yemen are subject to:

Outbound Investment

Yemeni residents investing abroad are taxed on their worldwide income, with foreign tax credits available.

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