How UAE VAT is calculated
The UAE standard VAT rate is 5%, in force since 1 January 2018.
- Adding VAT:
VAT = net × 5%andtotal = net × 1.05. AED 1,000 net becomes AED 1,050, of which AED 50 is VAT. - Removing VAT:
net = total ÷ 1.05andVAT = total − net(the same astotal × 5 ÷ 105). AED 1,050 including VAT is AED 1,000 net plus AED 50 VAT.
This calculator rounds each line to the fil (two decimals) and adds the lines up, which is how most invoicing systems present a tax invoice.
Zero-rated vs exempt supplies
Both put AED 0 of VAT on the line, but they are not the same thing:
| Zero-rated (0%) | Exempt | |
|---|---|---|
| VAT charged | 0% | None — outside the charge |
| Input VAT on related costs | Generally recoverable | Generally not recoverable |
| Typical examples | Exports outside the GCC, international transport, certain education and healthcare, first supply of new residential property | Certain financial services, residential leases and later sales, bare land, local passenger transport |
Whether a specific supply is zero-rated or exempt depends on the detailed conditions in the law, so check before you invoice.
What a UAE tax invoice must show
A full tax invoice generally needs:
- The words “Tax Invoice” clearly displayed
- Your name, address and Tax Registration Number (TRN)
- The customer's name, address and TRN (where they are registered)
- A sequential invoice number and the date of issue (plus the date of supply if different)
- A description of the goods or services, with quantity, unit price and the VAT rate for each line
- Any discount, the VAT amount and the total payable, shown in AED
A simplified tax invoice may be allowed in some cases — for example when the customer is not VAT-registered, or for lower-value supplies.
When do you need to register?
- Mandatory: when your taxable supplies and imports exceeded AED 375,000 over the last 12 months, or are expected to within the next 30 days.
- Voluntary: generally available once your taxable supplies, imports or taxable expenses exceed AED 187,500.
This page is a general guide, not tax advice. Rules and thresholds can change and depend on your circumstances — always check with the Federal Tax Authority (FTA) or a registered tax agent.