Amount (Excl. VAT)
AED 1,000
VAT Amount (5%)
AED 50
Amount (Incl. VAT)
AED 1,050
VAT Rate
5%
| Amount (Excl.) | VAT (5%) | Total (Incl.) |
|---|---|---|
| AED 100 | AED 5 | AED 105 |
| AED 500 | AED 25 | AED 525 |
| AED 1,000 | AED 50 | AED 1,050 |
| AED 5,000 | AED 250 | AED 5,250 |
| AED 10,000 | AED 500 | AED 10,500 |
| AED 50,000 | AED 2,500 | AED 52,500 |
| AED 100,000 | AED 5,000 | AED 105,000 |
Everything you need to know about UAE VAT
What is the UAE VAT rate?
The UAE charges VAT at a standard rate of 5%. This was introduced on 1 January 2018 as part of a GCC-wide agreement. The 5% rate applies to most goods and services supplied in the UAE. Some supplies are zero-rated (0%) such as exports, international transport, and certain education and healthcare services, while others are exempt from VAT entirely.
When was VAT introduced in the UAE?
VAT was introduced in the UAE on 1 January 2018, administered by the Federal Tax Authority (FTA). It was implemented as part of the GCC Framework Agreement on the Unified VAT. The registration threshold is AED 375,000 for mandatory registration and AED 187,500 for voluntary registration.
What is VAT-exempt in the UAE?
Certain categories are exempt from UAE VAT including: financial services (with some exceptions), residential property (first supply or lease), bare land, and local passenger transport. Additionally, zero-rated supplies include exports of goods and services outside the GCC, international transportation, certain education and healthcare services, and investment-grade precious metals (gold, silver with 99% purity).
FTA-Aligned: This calculator uses the official UAE Federal Tax Authority VAT rate of 5% for 2025. Consult a registered tax agent for complex VAT situations.
How the 5% value added tax works for businesses and consumers
What is VAT and what is the UAE rate?
VAT (Value Added Tax) is a consumption tax added to the price of goods and services. The UAE introduced VAT at a rate of 5% on 1 January 2018. It is managed by the FTA (Federal Tax Authority). The 5% rate is one of the lowest in the world, compared to 20% in the UK and 19% in Germany.
When must a business register for VAT?
You must register for VAT if your taxable supplies and imports exceed AED 375,000 over the past 12 months or if you expect them to exceed that amount in the next 30 days. Voluntary registration is available if your supplies or expenses exceed AED 187,500. Registration is done through the FTA's EmaraTax portal.
What goods and services are exempt from VAT?
Some supplies are exempt (no VAT charged and no input VAT recovery), including certain financial services, residential property (after the first supply), bare land, and local passenger transport. Zero-rated supplies (0% VAT but you can recover input VAT) include exports outside the GCC, international transport, certain healthcare and education services, and investment-grade precious metals.
How do I file a VAT return?
Most businesses file quarterly through the FTA's EmaraTax portal. You report the VAT you charged on sales (output tax) and the VAT you paid on purchases (input tax). If output tax is higher, you pay the difference to the FTA. If input tax is higher, you can claim a refund. Returns are due within 28 days after the end of each tax period.
Can I reclaim VAT on business expenses?
Yes, if you are VAT-registered. You can reclaim the 5% VAT paid on business purchases like office supplies, equipment, software, and professional services. For example, if you spend AED 10,000 on a laptop, you can reclaim AED 476 in input VAT (AED 10,000 / 1.05 x 0.05). You cannot reclaim VAT on entertainment, personal expenses, or employee perks like gym memberships.
What are the penalties for late VAT filing?
The FTA charges AED 1,000 for a first late filing and AED 2,000 for each repeat offence within 24 months. Late payment of VAT owed attracts a 2% penalty on the unpaid amount immediately, plus 4% on the seventh day, and then 1% daily up to a maximum of 300% of the unpaid tax. Keeping on top of filing dates is essential.
Do I need to charge VAT if I sell to other GCC countries?
Currently, sales to businesses in GCC states that have implemented VAT (such as Saudi Arabia, Bahrain, and Oman) are treated like exports and zero-rated, provided you have evidence of the goods leaving the UAE. Sales to GCC states that have not yet implemented VAT are treated like regular domestic supplies at 5%.
What must a valid UAE tax invoice include?
A tax invoice must show your business name and TRN (Tax Registration Number), the buyer's name and TRN (if registered), a unique invoice number, the date of supply, a description of goods or services, the amount before VAT, the VAT rate and amount, and the total including VAT. Simplified invoices (under AED 10,000) need fewer details.
FTA-Aligned: Based on 2025 FTA rates and regulations. For personal advice, speak to a qualified tax consultant.
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Disclaimer: This calculator provides estimates based on current UAE Federal Tax Authority rates and MOHRE labour law provisions. It does not constitute professional tax, financial, or legal advice. Your actual entitlements may differ depending on your individual circumstances, employment contract, and applicable free zone regulations. Always consult a qualified adviser before making financial decisions. Read our terms