Running a business in the UAE? Getting a handle on VAT calculations can save you time, whether you’re crunching numbers yourself or working with a tax advisor. A handy tool like the VAT Calculator UAE makes this a breeze. Just plug in your gross amount, click a button, and voilà—your VAT payable or refundable pops up on the screen.
UAE VAT Calculator
VAT Amount: -
Total Amount: -
VAT Basics: How It Started
Back in 2018, the UAE rolled out a 5% tax on most goods and services. Nearly every business registered under the Federal Tax Authority (FTA) has to factor this into sales and purchases. Let’s break down how to work with it:
Calculating VAT: The Simple Math
The standard rate is 5%. To figure out what you owe or collect:
- Multiply your invoice amount by 5.
- Divide that number by 100.
That’s your VAT amount. Easy, right?
Now, there are two scenarios—adding VAT to a price or peeling it back from a total. Let’s tackle both.
Scenario 1: Adding VAT to a Price
Say you’re quoting a customer a price without VAT. Here’s how to tack it on:
- Start with your base price (e.g., 1,000 AED).
- Multiply by 5, then divide by 100: 1,000 × 5 ÷ 100 = 50 AED.
- Add that to your original amount: 1,000 + 50 = 1,050 AED (total with VAT).
Scenario 2: Removing VAT from a Total
If a price includes VAT and you need the pre-tax amount:
- Take the total (e.g., 1,050 AED).
- Multiply by 5, then divide by 105: 1,050 × 5 ÷ 105 = 50 AED.
- Subtract that from the total: 1,050 – 50 = 1,000 AED (original price).
Input VAT vs. Output VAT: What’s the Difference?
Businesses juggle two types of VAT:
- Input VAT: The tax you pay on purchases (e.g., buying 10,000 AED of materials means paying 500 AED in VAT).
- Output VAT: The tax you collect from customers (e.g., selling a 1,000 AED product means collecting 50 AED in VAT).
At tax time, subtract Input VAT from Output VAT:
- If you collected more than you paid (e.g., Output > Input), you’ll owe the difference to the FTA.
- If you paid more (e.g., Input > Output), you can claim a refund.
Who Doesn’t Pay VAT?
Some sectors and transactions get a pass, like:
- Exports: Goods shipped outside the GCC.
- International transport: Flights, shipping, etc.
- Healthcare and education: Specific services in these fields.
- New homes: First sales of residential properties within three years of construction.
Why Did the UAE Introduce VAT?
The objective? To shift away from relying solely on oil revenue. The government uses VAT funds to improve infrastructure—think smoother roads, better schools, upgraded hospitals, and more.
FAQs About VAT in the UAE
- What’s the current VAT rate in the UAE?
The UAE charges a flat 5% VAT on most goods and services, introduced in 2018. - How do I calculate VAT on an invoice?
Multiply the invoice amount by 5 and divide by 100. For example, 1,000 AED × 5 ÷ 100 = 50 AED VAT. - What’s the difference between “VAT-inclusive” and “VAT-exclusive” prices?
- VAT-exclusive: The base price before adding VAT.
- VAT-inclusive: The total price after adding VAT.
- How do I remove VAT from a total amount?
Multiply the total by 5 and divide by 105. For 1,050 AED, 1,050 × 5 ÷ 105 = 50 AED VAT. Subtract this to get the original price. - What’s Input VAT?
It’s the tax your business pays on purchases (e.g., 500 AED VAT on 10,000 AED materials). You can deduct this from what you owe the government. - What’s Output VAT?
It’s the tax your business collects from customers (e.g., 50 AED VAT on a 1,000 AED sale). This gets reported to the FTA. - When do I pay VAT or claim a refund?
- Pay: If your collected VAT (Output) is more than what you paid (Input).
- Claim: If you paid more VAT (Input) than you collected (Output).
- Are any industries exempt from VAT?
Yes! Exemptions include exports outside the GCC, international transport, certain healthcare/education services, and first-time sales of new homes. - Is there a tool to simplify VAT calculations?
Try the VAT Calculator UAE—enter your amount, and it’ll show VAT payable or refundable instantly. - Why did the UAE introduce VAT?
To diversify government revenue beyond oil and fund public services like schools, hospitals, and infrastructure.