UAE VAT in brief
The UAE introduced Value Added Tax on 1 January 2018 at a standard rate of 5%. Some supplies are zero-rated (for example many exports, international transport, certain education and healthcare), and some are exempt (such as certain financial services, bare land and local passenger transport). Businesses register with the Federal Tax Authority (FTA) and show their Tax Registration Number (TRN) on tax invoices.
Adding 5% VAT
Total = Net × 1.05. AED 1,000 + 5% VAT = AED 1,050, of which AED 50 is VAT.
Removing VAT from a total
Divide by 1.05 – do not just take 5% off. Net = Total ÷ 1.05 and VAT = Total − Net. In other words, the VAT inside a 5% VAT-inclusive price is 1/21 of it.
Worked example: a receipt for AED 2,100 including VAT.
- Net: 2,100 ÷ 1.05 = AED 2,000
- VAT: 2,100 − 2,000 = AED 100
- Taking 5% off AED 2,100 would wrongly give AED 1,995.
Prices shown to customers
In the UAE, prices shown to consumers must normally include VAT. A tax invoice must show the supplier’s TRN, the date, a description, the amount before VAT, the VAT and the total. Our free invoice generator can add a 5% VAT line and your TRN.
Registration thresholds
Registration is mandatory when taxable supplies and imports go over AED 375,000 in 12 months, and voluntary from AED 187,500. Check the FTA website for current rules before you rely on this.
Reclaiming VAT as a business
VAT-registered businesses in the UAE charge 5% on their sales (output tax) and can usually recover the 5% they pay on business costs (input tax), paying the difference to the FTA with their VAT return. Keep tax invoices for everything you buy, because you need them to recover the VAT. Tourists can also claim some VAT back on shopping when leaving the UAE through the official tax refund scheme at the airport.
Prices in shops and restaurants are already VAT-inclusive, so if you want to know the VAT on your receipt, choose “Remove VAT”.