How VAT is calculated in UAE
The most common mistake when working backwards is subtracting 5% of the gross price. VAT is charged on the net figure, so you must divide by 1.05, not multiply by 0.95.
Registration and compliance
VAT in UAE is administered by the Federal Tax Authority (FTA). Registration is mandatory above AED 375,000 mandatory of annual taxable supplies. Registered businesses charge VAT on sales (output tax), reclaim VAT on business purchases (input tax) and file returns — usually quarterly, monthly for larger businesses.
GCC VAT rates compared
| Country | Standard rate | Introduced |
|---|---|---|
| Saudi Arabia | 15% | 2018 (raised 2020) |
| Bahrain | 10% | 2019 (raised 2022) |
| UAE | 5% | 2018 |
| Oman | 5% | 2021 |
| Qatar | 0% — not yet introduced | — |
| Kuwait | 0% — not yet introduced | — |
Frequently asked questions
What is the VAT rate in UAE?
5% standard rate, in force since 1 January 2018. Some goods and services are zero-rated or exempt.
How do I add 5% VAT to a price?
Multiply by 1.05. AED 1,000 + VAT = AED 1,050.
How do I remove VAT from a UAE price?
Divide the VAT-inclusive price by 1.05. AED 1,050 ÷ 1.05 = AED 1,000 net; VAT = AED 50. Do not subtract 5% of the gross figure — that gives the wrong answer.
Who has to register for VAT in UAE?
Businesses whose taxable supplies exceed AED 375,000 mandatory / AED 187,500 voluntary registration. Registration is through the Federal Tax Authority (FTA).
What is zero-rated in UAE?
Typically: exports outside the GCC, international transport, first supply of new residential property within 3 years, certain education and healthcare, investment-grade precious metals. Zero-rated suppliers can still reclaim input VAT.
What is VAT-exempt in UAE?
Typically: subsequent residential property supplies, bare land, local passenger transport, certain financial services. Exempt suppliers cannot reclaim input VAT on related costs.
Can tourists reclaim VAT?
Yes. The UAE Tourist Refund Scheme (via Planet) refunds VAT on eligible purchases over AED 250 at departure, less a fee.