The 5% standard rate
The UAE standard VAT rate is 5 percent on any supply or import of goods and services, set by Article 2 of Federal Decree-Law No. 8 of 2017. Some supplies are zero-rated, such as exports outside the GCC and international transport, and some are exempt, such as bare land and certain financial services. This tool applies the standard rate only. For zero-rated or exempt supplies the VAT amount is nil, and the treatment matters for your return.
The formulas
- Add VAT: VAT = net amount x 5%. Total = net amount + VAT, which equals net x 1.05.
- Remove VAT: net amount = total / 1.05. VAT = total - net, which equals total x 5 / 105.
Amounts are rounded to two decimals (fils). If you issue many invoice lines, round according to your accounting policy and check that totals agree with your system.
What a tax invoice should show
Under Article 59 of the VAT Executive Regulation, a full tax invoice shows the words "Tax Invoice", the supplier's name, address and tax registration number, the customer's details, a sequential or unique number, the date of issue, a description of the goods or services, the unit price, quantity, rate and amount of tax in AED, any discount, and the gross amount. A simplified invoice may be used where the customer is not VAT-registered, or is registered and the total is AED 10,000 or less, and it needs fewer details. Confirm the current text with your adviser, as the regulation has been amended over time.
Registration is mandatory when taxable supplies and imports exceed AED 375,000 over the previous 12 months or are expected to in the next 30 days, and voluntary above AED 187,500.
Common mistakes
The most frequent error is removing VAT by multiplying by 0.95. That gives AED 997.50 for a VAT-inclusive AED 1,050 instead of the correct net AED 1,000, because the 5 percent is charged on the net amount, not on the total. Other mistakes are charging 5 percent on an export that qualifies for zero-rating, treating an exempt supply as if it were zero-rated, and rounding each invoice line differently from the way your accounting system rounds the total. Check a sample of invoices against this calculator when you set up or change a system.