What is Company Registration in Yemen?
Country with two regions, South and North Yemen before unification do have struggling on development. After unification as Yemen has significantly got the height of development. It does not have a stock exchange so very limiting inward portfolio investment. Agriculture and fishing, oil and gas, industry and manufacturing, services and tourism are major area to explore and has a sign of significant growth in Yemen. Other aspects of economy are also not so bad but this are more focused and generating high return to both investors and country growth. As we all know very well, to develop any business, the registered structure is required and has to be well planned and maintained as per the legal and compliance framework. Moreover the same process will be discussed in brief below.
Business Form & Structure in Yemen
Yemen also do have basic structure of Business like Sole proprietorship, Partnership (both general and limited liability), foreign company can have their Branch or Representative Office or Subsidiary Company and corporate as per the applicable law of Yemen. Foreign Investment are welcomed but due to various condition and limitation the same has not been so increased highly in Yemen though the Government is working on this proposals to adopt new strategy so that the achievement of development can be obtained on the eyes of international monitoring organization. The following type of companies under Commercial Companies Law, as amended are permitted to carry out business in Yemen:-
Individual Companies which includes General Partnership, Simple Limited Partnership, Join Ventures.
Further Funding Companies like Public Share holding Company, Partnership limited by shares and Limited Liability Company (LLP, is most popular form of company in Yemen).
Foreign Companies can register their branch in Yemen, or appoint their agents in Yemen under applicable law. Investment law allows both local and foreign investors to invest in Yemen in approved sectors in order to obtain tax and other incentives.
Foreign entities can register their project under Free Zones Law in approved areas to qualify for the incentives.
Despite of fact of issues and problem on foreign investment, people across the globe are most interested in set up of Limited Liability Company (LLP) in Yemen.
Let’s have a look on formation requirement of Standardized form of Company i.e. Limited Liability Company.
Step by Step registration of Company in Yemen
First: Any person who want to start business/trade in Company Format required Unique Company Name at the Commercial register under Ministry of Trade & Industry, on applicable form type.
Second: After Name reservation, license application, AOA signature, publication and registration at the Ministry of Trade and Industry. This entire process cost around YER 80,570/- without consultancy charges. Its pure government fees to be paid or deposited to treasury of Government.
Third: Register as taxpayers with the General Taxes Department for the Payment of Income tax, obtain taxation card, and register the employees and register for other taxes. It has no cost but just a long length documentation and consultancy charges to be paid for doing all this activities on company behalf.
Fourth: Apply for Chamber of Commerce membership. Company incorporated in Yemen required to have membership of Chamber of Commerce to do trade/business in country. The entity required to pay around YER 15,050/- to get Chamber of Commerce Membership.
Fifth: Apply to the municipality to obtain license. Founders require to indicate the type of business at the time of application and cost around YER 80,000/- to be paid to Municipality for license.
Sixth: Register employees for the social security. Another but most importantly to secure the social security of associated employees with company, company has obligation to obtain registration in social security department under Ministry of Social Security. The Company must need to provide a full list of employees in prescribed form to obtain registration. As per applicable laws, in each month, the employer must deposit 15% of employee salary in the social security fund. Of this, 9% of the salary is contributed by the employer and 6% is deducted from the employee’s salary.
Taxation in Yemen
The current income tax law includes corporate profits, personal income tax, and real estate tax. The tax year is the calendar year, unless otherwise stated. Corporate tax is levied at a unified rate of 35%. Companies are eligible for registration under the investment law for investment projects which are exempt from corporate tax for a period of seven years as a benefit/incentives to corporate for infrastructure growth. The Yemeni government has approved Sales Taxes/VAT/GST @5%, uniform rate.
It is an obligation of assess registered in tax authority to file its annual return as per applicable form and supported documents with prescribed time limit. Tax returns shall be filed with the tax authorities within 120 days from the end of the tax year with a tax declaration showing their profits or losses accompanied by all supporting documents and papers as per applicable in Income Tax in Yemen. The taxpayer remains obliged to submit this declaration even if the determination of the profits has been arrived at by estimation, and he/ she himself should determine their estimated profits for the previous year and present the basis and documents of this estimation. Estimated basis is provided to those assesse who can’t assess the income at the time of filing however it is obliged to assess further filed a final result of trading and business in place of estimated tax return for particular fiscal year.
Accounting Practice/requirements:In general, all types of businesses, regardless of the activities, whether local or foreign, companies or establishments follow International Financial Reporting Standards (IFRS) and submit accounts audited. Companies, branches and other business establishments are required to keep their activities, accounts in the Republic, including the balance sheet and the account of profits and losses prepared and audited by an appointed chartered accountant and audited financials (in Arabic) should be submitted to the Ministry of Industry and Trade within the period of four months from the expiry of the fiscal year.
Under the review of legal regulatory framework applicable in Yemen, It would not be bad idea to go for investment in Yemen, as it is very promising and developing economy of Middle East. The growth trend followed by country has significant outcome for the investment in country.