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Hiring in Yemen‌

Yemen, officially known as the Republic of Yemen, is a country in the Middle East. Sana’a is the capital and the largest city of Yemen. Arabic is the official language and Yemeni Rial is the official currency. Service sector dominates the economy. This is followed by industry and agriculture. Moreover, petroleum production accounts for a quarter of the country’s GDP. Yemen’s main trading partners are China, Saudi Arabia, Turkey, UAE and Malaysia. Global PEO or Employer of Record (EOR) play a pivotal role in providing companies with services related to hiring employees, and ensuring compliance with Yemen’s legal and tax regulations. Code stipulates that employees are entitled to 30 days of annual leave. Residents are taxed on their worldwide income; non-residents are taxed on their Yemen-source income. Global PEO’s or Employer of Record (EOR) facilitate companies by ensuring compliance with Yemen’s Labor Code and tax laws.

statutory labor requirements

Probation Period

  • Upon signing a contract of employment a worker may be subject to a probationary period not exceeding six months with the same employer, to be stipulated in the contract.

Annual Leave

  • Workers shall be entitled to leave of not less than 30 days with full pay for each year of effective service, to be calculated on the basis of at least two-and-a-half days for each month.

Public Holidays

  1. Sixth anniversary of the start of an uprising that ended three decades of rule by President Ali Abdullah Saleh (11th February)
  2. Labor Day (1st May)
  3. Unity Day (22nd May)
  4. Eid al-Fitr
  5. Eid al-Adha
  6. Islamic New Year
  7. 1st Revolution Day (26th September)
  8. Liberation Day (14th October)
  9. Prophet's Birthday
  10. Independence Day (30th November)

Maternity Leave

  • A pregnant worker shall have the right to maternity leave with full pay for 60 days.
  • A pregnant worker shall be granted a further 20 days' leave, in addition to the days in the following cases:
    • if her labor was difficult as established by a medical report,
    • if she gives birth to twins.

Paternity Leave

  • There is no paternity leave

Sick Leave

  • In case of sickness, workers shall be entitled to continuous or non-continuous sick leave on the following basis:
    • sick leave with full pay for the first and second months of sickness;
    • sick leave with 85 per cent of wages for the third and fourth months of sickness;
    • sick leave with 75 per cent of wages for the fifth and sixth months of sickness;
    • sick leave with 50 per cent of wages for the seventh and eighth months of sickness.

Work Hours

  • Official working hours shall not exceed eight hours per day or 48 hours per week. 
  • Weekly hours of work shall be distributed over six working days followed by one day of rest with full pay.
  • Official working hours during the month of Ramadhan shall not exceed six hours per day or 36 hours per week.

Overtime

  • Any worker employed over time shall regardless of his occupation, be entitled to compensatory rest periods with pay calculated on the basis of the following rates:
    • one-and-a-half times for overtime on normal working days;
    • double time for overtime night work
  • Working hours, whether normal or overtime shall not exceed 12 hours per day.

Notice Period

  • If a contract is terminated by one of the parties thereto in accordance with article 36, the party wishing to terminate the contract shall give the other party prior notice of termination equivalent to the period prescribed for the payment of wages or pay the wage for such period in full in lieu of notice.
  • If either party refuses to receive notice of termination of the contract, the notice may be deposited with the Ministry or one of its offices.
  • The period of notice provided is calculated as follows:
    • 30 days for workers with monthly wages;
    • 15 days for workers with half-monthly wages,
    • one week for workers working on the basis of production or piece work, or hourly or daily or weekly rates.

Severance

  • According to art. 120(2) LC, at end of their service, where employees are not entitled to monthly pension or a lump-sum payment pursuant to the Social Insurance Act or other regulations, they shall be entitled to receive severance pay equivalent to at least one month's wages for each year of service (calculated on the basis of the last wage received by the employee).

13th / 14th Month Pay

  • No
  • There is no statutory requirement to pay the 13th or the 14th month salary.
  • Employees receive a generous 30 days annual leave and they are allowed to carry half of it to the following year.

income tax

  • Resident individuals are taxed on worldwide income
  • Nonresidents are taxed only on income earned from Yemen
  • Resident individuals are taxed on income from employment or commercial or industrial activities and noncommercial activities earned inside Yemen, as well as foreign source income
  • The tax rate is 10% to 15% for resident salaried individuals and a flat rate of 20% for nonresidents

Income Tax Rate

Resident Salaried Individuals

10% to 15%

Nonresidents

20%

deductible expenses

  • Deductions and allowances available on monthly salary income include YER 10,000, plus 6% of gross salary for an employee’s social security contribution and allowances, up to a maximum of YER 65,000

Deductible Expenses

  • Deductions and allowances available on monthly salary income include YER 10,000, plus 6% of gross salary for an employee’s social security contribution and allowances, up to a maximum of YER 65,000

immigration

  • Foreigners must obtain appropriate visas to enter the country
  • The main Yemen visas are: -
    • Student visa
    • Business visa
    • Tourist Visa
    • Transit Visa
    • Diplomatic/Official visa

Type of Visa/Permit

Documentation

Validity

Eligibility

Business Visa

  • Copy of signed passport
  • One original Yemen visa application form
  • Two recent, 2 x 2 identical, passport photographs
  • An official invitation/visa approval notification issued by the Department of Immigration in Yemen
  • Business Cover Letter
  • Health Certificate (Medical Record or doctor's letter)

2 months (single entry)

  • This visa is issued to foreigners entering Yemen for meetings, conferences etc.

Tourist Visa

  • Copy of signed passport
  • One original Yemen visa application form
  • Two recent, 2 x 2 identical, passport photographs
  • An official invitation/visa approval notification issued by the Department of Immigration in Yemen
  • Proof of Travel Arrangements
  • Health Certificate (Medical Record or doctor's letter)

3 months

  • This is a short stay visa

Diplomatic/ Official Visa

  • Original, signed passport
  • One original Yemen visa application form
  • Two recent, 2 x 2 identical, passport photographs
  • Proof of Travel Arrangements
  • Health Certificate (Medical Record or doctor's letter)

Visa Validity is based on the decision of the Consulate.

  • This visa is issued to diplomats and foreign government officials

value added tax

  • Yemen operates a General Sales Tax (GST) system
  • The general rate is 5%.
  • Although, a 10% rate applies to telecommunications and mobile communications services
  • Exemptions are also available

GST

Standard Rate

5%

Telecommunications and Mobile Communications

10%

Zero Rate

0%

withholding tax

Dividends

  • No withholding tax is levied on dividends paid to a resident entity, but dividends paid to a nonresident entity are taxed at a rate of 10%

Interest

  • No withholding tax is levied on interest paid to a foreign bank approved by the Yemen central bank; otherwise, the rate is 10%

Royalties

  • A 10% withholding tax applies on payments made to a nonresident in respect of commissions, patents, trademarks and copyright royalties

Fees for Technical Services

  • A 10% withholding tax applies on fees paid for the transfer or use of technology/licenses, payments for technical know-how and administrative knowledge and service fees paid to a nonresident
  • The 10% rate also applies to payments made to a resident or nonresident in respect of brokerage and commissions
  • The rate of 4%for fees paid to resident technical and professional service providers

 

WHT

Dividends

10%

Interest

10%

Royalties

10%

Technical Service Fees

4%/10%

termination

Either party to a contract of employment may terminate the contract, provided that the party wishing to do so shall notify the other, in any of the following cases:

    • if one of the parties fails to observe the terms of the contract or labor legislation;
    • if work permanently ceases, either entirely or in part;
    • if there is reduction in the number of workers for technical or economic reasons;
    • if the worker absents himself without legitimate reason for more than 30 days within the same year or for 15 consecutive days, provided that termination of contract is preceded by a written warning from the employer after 15 days of absence in the former case and seven days in the latter;
    • if the worker reaches statutory retirement age;
    • if the worker is declared unfit to work by decision of the competent medical committee.
  • If a contract is terminated by one of the parties thereto in accordance with article 36, the party wishing to terminate the contract shall give the other party prior notice of termination equivalent to the period prescribed for the payment of wages or pay the wage for such period in full in lieu of notice.
  • If either party refuses to receive notice of termination of the contract, the notice may be deposited with the Ministry or one of its offices.
  • The period of notice provided is calculated as follows:
    • 30 days for workers with monthly wages;
    • 15 days for workers with half-monthly wages,
    • one week for workers working on the basis of production or piece work, or hourly or daily or weekly rates.
  • According to art. 120(2) LC, at end of their service, where employees are not entitled to monthly pension or a lump-sum payment pursuant to the Social Insurance Act or other regulations, they shall be entitled to receive severance pay equivalent to at least one month's wages for each year of service (calculated on the basis of the last wage received by the employee).

statutory benefits

  • These are mandatory benefits as postulated by law
  • These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
  • Statutory benefits also include social security benefits

Statutory Benefits

Probationary Period

Annual Leave

Public Holidays

Maternity Leave

Sick Leave

Overtime Pay

Notice Period

Severance Pay

Social Security Benefits

payments and invoicing

  • The tax year is the calendar year
  • The tax return must be submitted to the tax authorities within 120 days after the end of the tax year
  • For salaried individuals, the employer withholds tax from wages and pays it to the tax authorities within the first 10 days of the following month
  • The employee is responsible for tax payment where the income is from a foreign source
  • Each individual must file a return
  • Joint returns are not permitted
  • The penalty for failure to file a tax return is 2% of the tax payable for each month of delay

ease of doing business

  • The ease of doing business index is an index created by Simeon Djankov, an economist at the Central and Eastern Europe sector of the World Bank Group.
  • Higher rankings (a low numerical value) indicate better, usually simpler, regulations for businesses and stronger protections of property rights.
  • According to the World Bank Yemen ranked 187th in the World in 2019 in terms of ease of doing business.

employee accruals

   
Christmas Bonus%

0%

Christmas Bonus Over Vacations %

0%

Severance per Year %

Employees are entitled to severance pay equal to one month's pay after completion of one year of employment (8.33% of annual salary)

Vacations % Workers shall be entitled to leave of not less than 30 days with full pay for each year of effective service (8.24% of annual salary)
Notice %

Employees are entitled to 30 days of notice period for one year of service or more (8.24%)

Christmas Bonus Over Notifications% 0%
Vacations Plus%
0%
Total percentage of Salary (yearly)
The total employment accruals as a percentage of salary per anum are equal to 24.81%

Employer Accruals Additional information

    Employment Accruals
Annual Leave Workers shall be entitled to leave of not less than 30 days with full pay for each year of effective service, to be calculated on the basis of at least two-and-a-half days for each month. This equals 8.22% (30/365 days) of annual income
Maternity Leave A pregnant worker shall have the right to maternity leave with full pay for 60 days. This equals 16.4% (60/365 days) of annual income
Sick Leave In case of sickness, workers shall be entitled to continuous or non-continuous sick leave on the following basis:
• sick leave with full pay for the first and second months of sickness;
• sick leave with 85 per cent of wages for the third and fourth months of sickness;
• sick leave with 75 per cent of wages for the fifth and sixth months of sickness;
• sick leave with 50 per cent of wages for the seventh and eighth months of sickness.
This equals 16.66% (2/12 months) of annual income
Overtime Any worker employed over time shall regardless of his occupation, be entitled to compensatory rest periods with pay calculated on the basis of the following rates:
• one-and-a-half times for overtime on normal working days;
• double time for overtime night work
Depends on the number of overtime hours worked
Severance According to art. 120(2) LC, at end of their service, where employees are not entitled to monthly pension or a lump-sum payment pursuant to the Social Insurance Act or other regulations, they shall be entitled to receive severance pay equivalent to at least one month's wages for each year of service (calculated on the basis of the last wage received by the employee). This equals 8.33% (1/12 months) of annual income

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