VAT and Sales Tax in Yemen
Yemen imposes a Value Added Tax (VAT) at a standard rate of 5%. Exports are zero-rated, and essential foodstuffs are exempt. The registration threshold is YER 10,000,000 in annual turnover.
VAT Rate Structure
| Category | Rate |
|---|---|
| Standard Rate | 5% |
| Exports | 0% |
| Essential Foodstuffs | Exempt |
Registration Threshold
Businesses with annual taxable turnover exceeding YER 10,000,000 are required to register for VAT. Registration is mandatory and must be completed within 30 days of exceeding the threshold. Voluntary registration is permitted for businesses below the threshold.
Exempt Supplies
The following supplies are exempt from VAT:
- Essential foodstuffs (basic food items)
- Medical and healthcare services
- Educational services
- Financial services (certain types)
- Insurance services
Zero-Rated Supplies
- Exports of goods and services
- International transport
Filing and Payment
- VAT Returns: Monthly or quarterly depending on turnover
- Filing Deadline: By the 15th day of the following month/quarter
- Payment: Due at the time of filing the return
- Electronic Filing: Required for registered businesses
Input VAT Recovery
Registered businesses can recover input VAT on purchases related to taxable supplies. Input VAT on exempt supplies is not recoverable. Partial exemption rules apply for businesses making both taxable and exempt supplies.
Penalties
- Late registration: fines apply
- Late filing: penalty per month of delay
- Late payment: interest per month
- Incorrect returns: penalties based on understatement