UAE VAT Calculator
Calculate 5% UAE Value Added Tax amounts for inclusive and exclusive prices.
UAE VAT Calculator
Calculator
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Formula: VAT = Price x 5% (exclusive) | Price / 1.05 (to extract from inclusive)
Worked example — Subtotal: AED 35,000 | VAT: AED 1,750 | Total: AED 36,750
Formula
VAT = Price x 5% (exclusive) | Price / 1.05 (to extract from inclusive)
For VAT-exclusive prices, multiply by 0.05 to get the VAT amount and add it to the price. For VAT-inclusive prices, divide by 1.05 to extract the pre-VAT price, then subtract to find the VAT component.
Worked Examples
Example 1: Adding VAT to Business Invoice
Problem:A Dubai electronics retailer sells 10 laptops at AED 3,500 each (VAT exclusive). Calculate the total invoice with 5% VAT.
Solution:Unit price (excl. VAT): AED 3,500 Quantity: 10 Subtotal: AED 3,500 x 10 = AED 35,000 VAT at 5%: AED 35,000 x 0.05 = AED 1,750 Total (incl. VAT): AED 35,000 + AED 1,750 = AED 36,750 VAT per unit: AED 1,750 / 10 = AED 175
Result:Subtotal: AED 35,000 | VAT: AED 1,750 | Total: AED 36,750
Example 2: Extracting VAT from Inclusive Restaurant Bill
Problem:A restaurant in Abu Dhabi presents a bill of AED 840 (VAT inclusive). Calculate the pre-VAT amount and VAT component.
Solution:Inclusive price: AED 840 Exclusive price: AED 840 / 1.05 = AED 800 VAT component: AED 840 - AED 800 = AED 40 Verification: AED 800 x 0.05 = AED 40 Effective rate: 5.00%
Result:Pre-VAT: AED 800 | VAT: AED 40 | Total: AED 840
Frequently Asked Questions
What is UAE VAT and when was it introduced?
The United Arab Emirates introduced Value Added Tax on January 1, 2018, at a standard rate of 5%. This was part of a GCC-wide agreement among the six Gulf Cooperation Council member states to implement VAT as a new source of government revenue to reduce dependence on oil income. The UAE Federal Tax Authority administers VAT collection and compliance. Unlike many countries with VAT rates of 15-25%, the UAE maintains one of the world's lowest VAT rates at just 5%. Businesses with annual taxable supplies exceeding AED 375,000 must register for VAT, while those exceeding AED 187,500 may voluntarily register. The tax applies to most goods and services at each stage of the supply chain, with the final consumer bearing the cost.
What goods and services are exempt or zero-rated for UAE VAT?
The UAE VAT system distinguishes between exempt supplies (no VAT charged, no input tax recovery) and zero-rated supplies (0% VAT charged but businesses can recover input tax). Zero-rated items include exports of goods and services outside the GCC, international transportation, first sale or lease of residential property within three years, crude oil and natural gas, and certain healthcare and educational services. Exempt supplies include subsequent sales or leases of residential property, certain financial services including life insurance, bare land, and local passenger transport. Understanding the distinction matters because zero-rating allows businesses to claim refunds on purchases, while exemption does not, potentially creating hidden costs in the supply chain for exempt categories.
How do you calculate VAT-inclusive and VAT-exclusive prices?
To add VAT to an exclusive price, multiply by the VAT rate and add to the original: VAT = Price x 0.05, Inclusive Price = Price x 1.05. For example, an item priced at AED 500 exclusive of VAT has VAT of AED 25, making the inclusive price AED 525. To extract VAT from an inclusive price, divide by 1.05 to get the exclusive amount: Exclusive = Inclusive / 1.05. For an inclusive price of AED 525: Exclusive = 525 / 1.05 = AED 500, VAT = AED 25. This reverse calculation is essential for businesses receiving VAT-inclusive invoices who need to determine the actual tax component for their VAT return filings with the Federal Tax Authority.
What are the UAE VAT filing and payment requirements?
UAE VAT returns must be filed electronically through the Federal Tax Authority EmaraTax portal. Most businesses file quarterly, though those with annual taxable supplies exceeding AED 150 million must file monthly. The return is due within 28 days after the end of the tax period. Late filing incurs a penalty of AED 1,000 for the first offense and AED 2,000 for repeat offenses within 24 months. Late payment penalties are 2% of unpaid tax immediately, 4% on the seventh day, and 1% daily thereafter up to a maximum of 300%. Businesses must maintain records for at least five years. Input tax on business expenses can be offset against output tax collected, with the net amount paid to or refunded by the FTA.
How does UAE VAT affect tourists and can they get refunds?
The UAE operates a Tourist Refund Scheme administered by Planet, allowing eligible tourists to reclaim VAT paid on purchases during their visit. To qualify, tourists must be non-UAE residents aged 18 or older, purchases must exceed AED 250 per transaction from registered retailers displaying the Tax Refund for Tourists logo, and goods must be exported within 90 days of purchase. The refund process involves obtaining a Tax Free tag at the point of sale, validating purchases at self-service kiosks at departure airports or border crossings, and receiving refunds via credit card or cash. The refund covers the 5% VAT minus a processing fee. This scheme was implemented in November 2018 to maintain the UAE appeal as a global shopping destination and tourist hub, particularly in Dubai and Abu Dhabi.
What is the difference between output tax and input tax on a UAE VAT return?
Output tax is the VAT you charge customers on taxable supplies; input tax is the VAT you were charged by suppliers and on imports. The return nets one against the other: output tax exceeding recoverable input tax leaves a payment to the Federal Tax Authority, while the reverse leaves a refundable credit. Input tax is only recoverable if it relates to taxable supplies and is supported by a valid tax invoice, which is why supplier documentation drives the recoverable side.
How does VAT work for businesses located in a designated zone?
A designated zone is a fenced free zone listed by Cabinet decision with customs controls and internal procedures for storing and processing goods. For VAT purposes, a supply of goods moved between designated zones can fall outside the scope of UAE VAT, which is why zone traders often see no tax on stock transfers. The relief is narrow: it attaches to goods, not services, so consultancy, leasing and most services supplied within a zone are standard-rated, and goods consumed inside the zone are treated as supplied onshore.
What is a tax group registration and when is it worth forming one?
Two or more related legal entities established in the UAE and under common control can register as a single taxable person, sharing one tax registration number and filing one return. Supplies between the members are then disregarded, so intra-group recharges no longer carry VAT and no cash flows out and back. The trade-off is joint and several liability for the group's tax debts. It suits groups with heavy internal recharging; it helps less when members are all fully taxable and already recover their input tax.
Who accounts for the VAT on goods and services imported into the UAE?
The registered recipient does. Rather than paying tax at the border and waiting for recovery, an importer declares the VAT as output tax on its own return and simultaneously claims it as input tax where the import supports taxable activity, so the net effect is usually nil cash. The same self-accounting applies to services bought from overseas suppliers. The point of the mechanism is neutrality: imports carry the same 5% burden as domestic purchases, and a business making exempt supplies cannot recover the input side.
How should VAT be shown on an invoice issued in a foreign currency?
A UAE tax invoice may be denominated in any currency, but the tax amount must also be stated in dirhams, converted using the exchange rate published by the Central Bank of the UAE for the date of supply. That means a single fixed rate applies to the transaction, not whatever rate your bank happened to give you on settlement. Any difference between the converted figure and the cash you actually receive is a foreign exchange gain or loss, not an adjustment to the VAT declared.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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