Indirect tax - Yemen

A general sales tax (GST) is the main type of indirect taxation in Yemen, (GST) is similar in operation to a value-added tax (VAT) is imposed on the following transactions:

• • Sales of goods or services, or both.
  • Importing any service or goods from outside Yemen and markets inside Yemen.

It is a tax on consumption which is applied during the production and distribution process to most goods and services. It is also applied to goods, and certain services, entering the country.

There are many rates of VAT that are applied to goods and services in Yemen; the general rate 5%, although a 10% rate applies to some telecommunications and mobile communications products or services. Exemptions also are available. The special regime rates such as the schedule tax and the zero rate for goods and services exported. In addition, some goods and services are exempt from the tax.

Businesses that make exempt supplies are unable to claim all of the input tax that they incur, so the VAT paid to suppliers will be a ‘real’ cost.

Most goods imported into Yemen are subject to VAT. The tax will have to be paid by the importer at the time of importation at the phase of release (custom clearance) and shall be collected in the same way of custom duty collection and relevant. Where the importation is for business purposes and the importer is registered for VAT, it may be possible to deduct the most of tax (subject to certain rules).

VAT registered businesses will charge VAT (output tax) on its taxable sales, and incur VAT (input tax) on its taxable purchases (including any VAT paid during import of goods). The difference between the output tax and the deductible input tax in each accounting period will be the amount of VAT payable by the business to the tax authority. Where the input tax exceeds the output tax, it can be carried forward to the next tax period or a refund can be claimed.

Yes. It relates to the annual turnover of taxable transactions in the Yemen, and once the limit has reached it is necessary to register. Registration is voluntary where turnover is below this amount.

Every physical or juridical person who sells a commodity or renders a service subject to the tax and whose total sales of the commodities and services subject to tax and exempted therefrom have reached or exceeded, within the twelve months prior to the date of the enactment of this Law, YER 50 million (fifty million Yemeni Rials), should submit an application to the Authority to register his name and his details on the Form prepared for such purpose.

Every importer, exporter or distribution agent of a commodity or service subject to the tax, for trading purpose, shall register themselves at the Authority whatever the size of the transaction.

Yes. Every person who is non-resident and non-registered with the tax authority and sells commodities or renders services, subject to the tax, to a non-registered person within the country and who does not practice an activity at a stabilised premises in Yemen, shall appoint a representative or an agent in Yemen. This agent is responsible for carrying out all the taxpayer’s obligations prescribed by this law including the registration with the authority and paying the tax, additional tax and other taxes due by the provisions of the present law.

The resident person shall make sure that the non-resident person has appointed a representative or an agent in Yemen. In the event that the non-resident person has not appointed a representative or an agent in Yemen, the resident shall pay the tax and other taxes due by virtue of the provisions of the present law to the Authority without prejudice to his right to have recourse against the non-resident person.

There is no specific legislation in Yemen.

The non-resident who sells commodities or renders services, subject to the tax, and who does not practice an activity at established premises in Yemen, shall appoint a representative or an agent thereof in Yemen to be responsible for carrying out all the taxpayer’s obligations prescribed by this law including the registration with the Authority and paying the tax, additional tax and other taxes due by virtue of the provisions of the present law.

A registered entity must submit to the Authority a monthly declaration of its sales taxes for each month, within the first (21) days of the following month.

A default surcharge penalty may be imposed by the tax authority if VAT declarations are not submitted on time, or the related tax is not paid by the due date. Anyone delaying the submission of the declaration and the payment of the tax and schedule tax beyond the period determined in Article (33) of the law 19 for year 2001:

• A delay penalty equal to 2% (two percent) of the unpaid tax amount is to be collected for each month of delay or part thereof provided that it does not exceed 20% (twenty percent) of the entitled tax amount. 
• The penalty is calculated over the months of delay with the registered person and is collected in the same manner in which the tax is collected.
• If the entitled tax calculated on the basis of declarations and the tax resulting from amendment of declarations or of final assessment is not paid within the dates and periods specified in this law, an amount of 1% (one percent) of the unpaid tax value is added for each month of delay or any part thereof.

In addition to the VAT declaration, a beneficiary of an imported service, who is non-resident and non-registered, and has no tax representative or agent in Yemen, shall calculate the tax due and remit it to the tax authority. This should happen no later than thirty days from the date the service is rendered.

Yes. A range of penalties can be imposed where businesses do not comply with the VAT rules as outlined below:

• Delaying the submission of the declaration and the payment of the tax and schedule tax beyond the period determined in Article (33) of the law for each month, within the first (21) days of the following month.
• Submitting false data on the sales of commodities or services subject to the tax, in case they reveal an excess over the sales stated in the declaration.
• Discovery of shortage or excess in the commodities deposited in the free zones and markets.
• Non-notifications of the Authority of the changes occurring in the data detailed in the registration application within the fixed time limit.
• Non enabling the Authority officials to carry out their duties or practice their powers regarding the supervision, inspection, survey, revision, and demanding the documents or reviewing them.
• Penalties also, can be applied for errors and omissions made on tax declarations.
• Penalties can also be applied where the business has failed to maintain adequate records, provide information, or makes repeated mistakes.
• The penalty will be doubled in cases of recommitting any of the crimes within one-year period.

No.

Registered people are required to issue a paper-based or electronic tax invoice upon the sale of a taxable commodity or provision of a taxable service, according to the following controls:

• Invoices should be drawn up in duplicate. The original is to be handed over to the buyer and the copy is to be kept by the registered person.
• Invoices should be serially numbered based on the dates on which they are drawn up and should be free of errors. A tax invoice should incorporate the following data:
  
  • Serial number of the invoice and its date of issue 
  • Name and address of the registered person and their registration number 
  • Name and address of the buyer and their tax registration number or ID number, if they do not have a tax registration number 
  • A description of the commodity sold or the service rendered and its value
  • The mandatory tax rate and value
  • The total value of the invoice

The invoice data should be recorded on the spot in the registered person’s register prepared for their purpose.

If the invoice is cancelled, the registered person should keep the original and all copies of the invoice.

No.