How to Calculate VAT in the UAE (With Excel Formulas)

UAE VAT is charged at a standard rate of 5%. To add VAT to a net price, multiply it by 0.05, or multiply by 1.05 for the total. To find the VAT inside a VAT-inclusive price, multiply the price by 5 and divide by 105. The VAT you pay the Federal Tax Authority (FTA) for each tax period is your output VAT on sales minus the input VAT you can recover on purchases.

How we wrote this guide. The rules come from the UAE VAT law (Federal Decree-Law No. 8 of 2017 and its amendments), its Executive Regulation as amended to September 2026, and the FTA's public clarification on tax invoices (VATP006). The examples are ours. This guide explains the arithmetic, not your tax position: for a specific case, ask your tax adviser or the FTA. Facts last verified: 3 November 2026.

The five formulas:

VAT on a net price: net × 5% (or net × 0.05)
Total including VAT: net × 1.05
VAT inside a VAT-inclusive price: gross × 5 ÷ 105 (the same as gross ÷ 21)
Net price from a VAT-inclusive price: gross ÷ 1.05
VAT to pay for a tax period: output VAT − recoverable input VAT

The UAE VAT Rate

Article 3 of the VAT law sets a standard rate of 5% on taxable supplies and imports. Not every sale carries 5%:

Standard-rated: 5% VAT. Most goods and services.
Zero-rated: VAT at 0%, such as qualifying exports and certain healthcare, education and real estate supplies. You still issue a tax invoice and can recover the related input VAT.
Exempt: no VAT is charged, for example on certain financial services, residential property and local passenger transport. Input VAT on costs used for exempt supplies is generally not recoverable.
Outside the scope of VAT: not a supply for UAE VAT at all, for example when the place of supply is outside the UAE.

The arithmetic below is for standard-rated supplies. The tax category matters as much as the rate, because it decides what goes on the invoice and the return.

How to Add 5% VAT to a Price

Multiply the net price by 5% to get the VAT, then add it to the net price.

Example: a consultancy invoices AED 1,200 for a standard-rated service.

VAT: 1,200 × 5% = AED 60
Total: 1,200 + 60 = AED 1,260, or 1,200 × 1.05 in one step

How to Calculate VAT from a VAT-Inclusive Price

When a price already includes VAT, the VAT is 5/105 of it, not 5%. This is the most common mistake in VAT spreadsheets.

Example: a shop sells an item for AED 1,050 including VAT.

VAT: 1,050 × 5 ÷ 105 = AED 50
Net price: 1,050 ÷ 1.05 = AED 1,000
Check: 1,000 + 50 = 1,050

Taking 5% of the gross price gives 1,050 × 5% = AED 52.50, which overstates the VAT by AED 2.50 on every AED 1,050 of sales.

UAE VAT Formulas in Excel

Put the amount in cell A2, then use:

VAT on a net amount:            =ROUND(A2*5%,2)
Total including VAT:            =A2+ROUND(A2*5%,2)
VAT inside a gross amount:      =ROUND(A2*5/105,2)
Net amount from a gross amount: =A2-ROUND(A2*5/105,2)

Two habits keep a spreadsheet in line with your invoices:

Round the VAT, not the total. Rounding the VAT to two decimals first, then adding or subtracting it, keeps net + VAT = gross on every line.
Calculate per line. Put each invoice line in its own row and round each line's VAT, which is how the FTA expects tax invoices to be rounded.

Rounding to the Nearest Fils

A fils is one hundredth of a dirham. Article 61 of the Executive Regulation lets you round VAT that works out to a fraction of a fils to the nearest fils, using normal mathematical rounding. The FTA's clarification VATP006 says that on a full tax invoice this rounding should be done line by line. Its examples: AED 2.357 becomes 2.36, and AED 9.862 becomes 9.86.

Line rounding can differ from rounding the invoice total by a fils or two. Example: three lines of AED 2.10 each.

Per line: 2.10 × 5% = 0.105, which rounds to 0.11. Three lines give AED 0.33.
On the total: 6.30 × 5% = 0.315, which rounds to 0.32.

Follow the line-by-line method, and make sure your accounting system does the same, so the VAT on your invoices matches your VAT return.

Discounts

VAT is charged on the price after the discount. Article 39 of the VAT law reduces the value of a supply in proportion to any discount.

Example: a list price of AED 1,000 with a 10% discount.

Discounted price: 1,000 − 100 = AED 900
VAT: 900 × 5% = AED 45
Total: AED 945

Invoices in Foreign Currency

If you invoice in another currency, the amounts on the tax invoice must be converted into dirhams at the exchange rate approved by the UAE Central Bank on the date of supply, under Article 69 of the VAT law. VATP006 adds that the invoice must show the tax in AED and the exchange rate used. Our guide to UAE tax invoice requirements lists everything else a tax invoice must show.

Example: a USD 1,000 standard-rated service, at the dirham's rate of 3.6725 to the US dollar.

Value in AED: 1,000 × 3.6725 = AED 3,672.50
VAT in AED: 3,672.50 × 5% = 183.625, which rounds to AED 183.63

Prices You Show Customers

The prices you publish for taxable supplies must include VAT, under Article 38 of the VAT law and Article 27 of the Executive Regulation. There are two exceptions where you may show prices without VAT, as long as they're clearly labelled as excluding VAT:

Exports of goods or services.
Customers who are themselves VAT-registered.

For certain reverse-charge supplies, Article 27 requires prices to be shown excluding VAT.

How to Calculate the VAT You Pay

Article 53 of the VAT law sets the VAT payable for a tax period as your output VAT minus your recoverable input VAT for the same period. Checking both every month, as part of a month-end close, makes the quarterly return quicker. The standard tax period is three calendar months (Executive Regulation, Article 62), though the FTA can set a different period.

Example: a trading company's quarter.

Sales of AED 400,000 net, all standard-rated: output VAT of AED 20,000.
Purchases of AED 250,000 net: input VAT of AED 12,500. Of that, AED 1,000 was VAT on entertaining clients, which isn't recoverable (see below).
Recoverable input VAT: 12,500 − 1,000 = AED 11,500.
VAT payable: 20,000 − 11,500 = AED 8,500.

If your recoverable input VAT is more than your output VAT, you have excess recoverable tax. Under Article 74 of the VAT law, the FTA first offsets it against any tax or penalties you owe. You can apply to recover the rest, and if you don't, it's carried forward to later tax periods.

Input VAT You Can't Recover

Article 53 of the Executive Regulation blocks input VAT in three main cases:

Entertainment for people who aren't your employees, such as customers, potential customers, officials or shareholders. Entertainment includes hospitality such as meals and drinks outside a normal meeting, accommodation, events and trips.
Motor vehicles available for personal use, bought, rented or leased for the business. Vehicles for up to 10 people count, but trucks, forklifts and similar vehicles don't, and taxis, emergency vehicles and rental fleet cars are excluded.
Goods or services for employees' personal benefit at no charge to them, with exceptions, such as where labour law requires them. The exceptions have been amended several times, most recently by Cabinet Decision No. 149 of 2026 for staff accommodation, so check the current text before you claim.

Zero-Rated, Exempt and Reverse Charge Sales

Zero-rated sales: charge 0%, show them on the tax invoice, and recover the related input VAT.
Exempt sales: charge no VAT. Input VAT on costs used for them generally can't be recovered, and businesses with both exempt and taxable sales have to apportion it.
Reverse charge: the supplier doesn't charge VAT, and the customer accounts for it instead. For imported services and goods under Article 48, the customer is treated as making the supply to itself. It records the VAT as output tax and, if it's recoverable, as input tax in the same return, so the net cost is often zero.

On a UAE e-invoice, every line carries one of these tax categories. Our guide to what PINT AE is lists all six.

VAT and E-Invoicing

From the date e-invoicing applies to you (mandatory from 1 July 2027 for most businesses under AED 50 million), each tax invoice becomes a PINT AE e-invoice. The Ministry of Finance's list of mandatory fields includes the VAT amount and the amount payable in AED for every line, even when you invoice in another currency. So line-by-line VAT, rounded to the fils, isn't just good practice: it's part of the invoice data. See our UAE e-invoicing guide for SMEs for the dates.

Where Octate Fits

Octate applies VAT to every sale, purchase and expense, keeps a full audit trail, and gives you the figures for your VAT return, in the same ledger as your invoices and stock. See accounting and VAT.

Quick Answers

How do you calculate VAT in the UAE? Multiply the net price by 5% for standard-rated supplies. To take VAT out of a VAT-inclusive price, multiply it by 5 and divide by 105.

What is the VAT formula in Excel? For a net amount in A2, the VAT is =ROUND(A25%,2). For a VAT-inclusive amount, it's =ROUND(A25/105,2).

How do I remove 5% VAT from a price? Divide the VAT-inclusive price by 1.05 to get the net price. The VAT is the difference.

Is VAT 5% on everything in the UAE? No. Most supplies are standard-rated at 5%, but some are zero-rated at 0%, some are exempt, and some are outside the scope of VAT.

How is VAT payable calculated? Output VAT on your sales for the tax period minus the input VAT you can recover on purchases for the same period.

Should VAT be rounded per line or on the total? Per line, to the nearest fils, according to the FTA's clarification VATP006.

Which exchange rate do I use for VAT? The rate approved by the UAE Central Bank on the date of supply.

Do prices in the UAE have to include VAT? Published prices for taxable supplies must include VAT, except for exports and VAT-registered customers, where prices clearly marked as excluding VAT are allowed.

How often do UAE businesses pay VAT? The standard tax period is three months, though the FTA can assign a shorter or longer one.

Sources

Federal Tax Authority: Federal Decree-Law No. 8 of 2017 on VAT and its amendments, Articles 3, 38, 39, 48, 53, 54, 69 and 74, and the Executive Regulation, as amended to Cabinet Decision No. 149 of 2026, Articles 27, 53, 61 and 62. Both are unofficial English translations published by the FTA.
Federal Tax Authority: Public Clarification VATP006 on tax invoices
Ministry of Finance: UAE Electronic Invoice Mandatory Fields, version 1.1
Octate: accounting and VAT

Checked on 3 November 2026.