UAE VAT Calculator: How 5% VAT Works (With Examples)

2026-08-30 · 7 min read

The UAE applies 5% Value Added Tax on most goods and services — one of the lowest rates in the world, but still a source of daily confusion. Is that restaurant bill VAT-inclusive? How much VAT sits inside a AED 1,050 invoice? This guide answers with numbers, not jargon.

The two directions: adding and removing VAT

Adding VAT: multiply the base price by 1.05. A AED 200 service becomes AED 210, of which AED 10 is VAT. Removing VAT (extracting it from a VAT-inclusive price): divide by 1.05. A AED 1,050 invoice contains AED 1,000 base + AED 50 VAT — not AED 997.50, the common mistake of subtracting 5%. Our UAE VAT Calculator does both directions instantly so you never do long division at a checkout counter again.

Real examples

• Freelancer quotes AED 5,000 + VAT → client pays AED 5,250.
• Shop receipt shows AED 105 total (inclusive) → VAT inside is AED 5.
• Annual rent AED 60,000 for a commercial unit + VAT → AED 63,000 total.

What is zero-rated or exempt?

Some categories — certain healthcare, education, residential rent, and exports — are zero-rated or exempt, meaning no 5% is added. Rules have fine print (e.g. commercial vs residential property), so for business decisions confirm with the Federal Tax Authority guidance or your accountant. This calculator handles the arithmetic; it is not tax advice.

VAT and currency together

Buying from abroad? Convert the foreign price with our Currency Converter first, then apply 5% VAT on the AED figure. And if you invoice internationally, pairing the VAT math with a Word to PDF invoice keeps your paperwork clean and professional.

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