The UAE standard VAT rate is 5%. Calculating it is simple once you know which way you're going: adding VAT to a net price, or taking it out of a price that already includes VAT.
The UAE VAT calculation formulas
| You want | Formula |
|---|---|
| VAT on a net amount | Net × 0.05 |
| Total including VAT | Net × 1.05 |
| Net amount from a VAT-inclusive total | Total ÷ 1.05 |
| VAT inside a VAT-inclusive total | Total × 5 ÷ 105 (or Total − Total ÷ 1.05) |
Example 1: Adding VAT to a price
You charge a client AED 8,000 for consulting.
- VAT = 8,000 × 0.05 = AED 400
- Total = 8,000 × 1.05 = AED 8,400
Example 2: Removing VAT from a VAT-inclusive price
A receipt shows AED 262.50 including VAT.
- Net = 262.50 ÷ 1.05 = AED 250.00
- VAT = 262.50 × 5 ÷ 105 = AED 12.50
Common mistake: taking 5% of the VAT-inclusive total. 5% of AED 262.50 is AED 13.13, which overstates the VAT. Always divide by 1.05 (or use 5/105) when the price already includes VAT.
Example 3: Working out VAT payable for a quarter
| Net | VAT | |
|---|---|---|
| Sales (standard-rated) | AED 300,000 | AED 15,000 output VAT |
| Purchases with valid tax invoices | AED 120,000 | AED 6,000 input VAT |
| VAT payable | AED 9,000 |
VAT payable = output VAT − recoverable input VAT. It's due with your return by the 28th day after the quarter ends. See our VAT due date calendar.
When 5% doesn't apply
- Zero-rated (0%): for example qualifying exports of goods and services, international transport and certain education and healthcare. VAT is 0, but you can still recover input VAT.
- Exempt: for example certain residential property, local passenger transport and some financial services. No VAT is charged, and related input VAT generally can't be recovered.
- Blocked input VAT: for example most client entertainment and some motor vehicle costs. You pay the VAT but can't recover it.
Rounding
Calculate VAT per invoice and round to two decimal places (fils). Small rounding differences between your invoices and your accounting software are normal; large ones usually mean VAT has been calculated on the wrong amount.
Calculate it instantly
Use our free UAE VAT calculator to add or remove 5% VAT in one click. Not registered yet? Check the VAT registration threshold.
Skip the maths
Our free UAE VAT calculator adds or removes 5% VAT instantly.