Vat Calculator UAE

If you are doing business in the UAE, knowing how to calculate VAT is quite helpful, no matter if it’s managed by your accountant or a VAT consulting agency. An effective way to simplify and understand this process is by using our VAT Calculator UAE.

This tool will help you calculate your VAT amount by simply entering the gross amount in the required field. And with just a few clicks, you can see your payable or receivable VAT amount on the screen.

Add VAT (5%)

Extract VAT (5%)

Enter Amount (Excluding VAT)

Amount AED 0.00

VAT 5% AED 0.00

Total AED AED 0.00

How VAT works in the UAE

Value Added Tax (VAT) was first introduced in the UAE on 1st January, 2018. It is imposed on almost every business in the country that is liable to pay 5% VAT on goods or services bought or sold as per the Federal Tax Authority (FTA) regulations.

The following is a step-by-step guide on how VAT works in the UAE or simply, how to calculate VAT:

In the UAE, VAT is set at a rate of 5%. To calculate VAT on an invoice amount, you need to follow these steps:

Multiply the original invoice amount by 5.
Divide the result by 100.

And that’s how you will get the taxable amount.

Now, there are two types of VAT calculations: adding VAT to an amount or subtracting VAT from an amount. Let’s explore both in detail.

Adding VAT (Exclusive of VAT)

To calculate VAT when it’s not included in your amount, follow these simple steps:

Take your original amount
Multiply it by 5
Divide it by 100. This will give you the VAT amount. Now, add this to your original amount to get the final price with VAT.

For example:

If the original amount is: 1000/- AED

The VAT calculation will be: 1000 × 5 ÷ 100 = 50/- AED

And the final amount with VAT will be: 1000 + 50 = 1050/- AED

Subtracting VAT (Inclusive of VAT)

On the other hand, when you have an amount that already includes VAT and you need to find the original price, follow these steps:

Take your total amount
Multiply it by 5
Divide it by 105. This gives you the VAT amount. Then, subtract this from your total amount to get the original price without VAT.

For example:

The total amount with VAT is: 1050/- AED

VAT calculation: 1050 × 5 ÷ 105 = 50/- AED

Original amount without VAT: 1050 – 50 = 1000/- AED

What are Input VAT and Output VAT?

The VAT system is based on two fundamental components: Input VAT and Output VAT. It’s very important for businesses in the UAE to understand these concepts for accurate VAT reporting and compliance.

Let’s discuss both one by one:

Input VAT

Input VAT is the VAT paid by a business on its purchases of goods or services. For example, if a business purchases raw materials worth 10,000/- AED, it will pay 500/- AED as VAT at the 5% rate applicable in the UAE.

This amount can be deducted from the VAT payable when filing VAT returns, reducing the business’s overall tax liability.

Output VAT

Output VAT is the VAT collected by a business on the sale of goods or services. For instance, if a business sells a product worth 1,000/- AED, it will collect 50/- AED as a 5% VAT.

Net VAT Payable or Refundable

Now, here comes a point where businesses need to know if they have to pay VAT or get a refund. So, when filing tax returns, they calculate the net VAT by finding the difference between Output VAT and Input VAT:

Pay VAT: If Output VAT (VAT collected) exceeds Input VAT (VAT paid), the business must pay the difference to the Federal Tax Authority (FTA).
Claim Refund: If Input VAT exceeds Output VAT, the business can claim a refund from the FTA.

VAT Exemptions in the UAE

Following are some of the industries and activities that are exempt from paying VAT according to Ministry of Finance, UAE:

Category	VAT Exemption
Export	Goods and Services exports out of the GCC
International Transport	International transportation and related services
Precious Metal	Precious metals such as gold or silver with 99% purity
Health Care	Supply of certain healthcare services
Education	Supply of certain educational services
New Residential Properties	Newly built residential properties that are sold for the first time within the first three years of construction

Why was VAT Introduced in the UAE?

VAT in the UAE was introduced as part of the government agenda to reduce revenue generation dependency through oil and other hydrocarbons in the country. The UAE government is trying to diversify their revenue generation so they are not fully dependent on oil related revenue only.

In return for the VAT collected by the government, it offers residents countless facilities like better transport, public hospitals, schools, universities, and other aspects of day-to-day life.

FAQs

To calculate VAT in the UAE, simply multiply the original invoice amount by 5 and then divide the result by 100. This will give you the VAT amount.

The VAT rate in the UAE is currently set at 5%.

VAT can be paid online through the EmaraTax website. Each company has a registered account; after logging in, you’ll need to fill in the required details and pay the taxable amount using a debit/credit card or bank transfer.

Yes, businesses in the UAE can adjust their VAT during quarterly filings. If the amount of VAT you have paid on purchases exceeds the VAT collected on your sales, you may be eligible for a VAT refund.

Additionally, tourists can also claim VAT refunds on certain goods purchased in the UAE. However, the total refund amount for tourists cannot exceed 35,000/- AED.

Yes, you can submit the VAT return yourself as long as you have your login credentials and know the process of how to submit it.

The standard VAT rate in the UAE is 5%. To calculate VAT on an amount without VAT included, multiply the original amount by 5 and divide by 100. For an amount that already includes VAT, multiply the total by 5 and divide by 105 to isolate the VAT amount.

Yes, in addition to the VAT Calculator, you can use Gratuity Calculator on our website to calculate end-of-service benefits as per UAE labor law.

After reading this article, you should now have a solid understanding of how to calculate VAT in UAE, either manually or by using our VAT Calculator UAE.

Vat Calculator UAE – How to Calculate VAT in UAE Superfast