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UAE VAT is 5% on standard-rated supplies, 0% on zero-rated supplies, and exempt on certain supplies. This guide explains how to calculate UAE VAT, when to charge it, and provides practical examples for 2026.
In this guide:
UAE VAT Rates
- Standard rate: 5% (most goods and services)
- Zero rate (0%): exports of goods outside GCC; certain food items; healthcare; education; certain real estate (new residential)
- Exempt: bare land; local passenger transport; financial services (margin-based); residential property (after first supply)
Formula: Calculating VAT on a UAE Invoice
- VAT on price before VAT (exclusive): Invoice amount × 5% = VAT amount; Invoice total = invoice amount + VAT amount
- Example: AED 10,000 service → AED 10,000 × 5% = AED 500 VAT → Invoice total: AED 10,500
- VAT from price including VAT (inclusive): Price including VAT ÷ 1.05 = Price before VAT; then × 5% = VAT
- Example: AED 10,500 received (VAT inclusive) → AED 10,500 ÷ 1.05 = AED 10,000 before VAT; AED 500 VAT
UAE VAT Invoice Requirements
All UAE VAT invoices must include:
- Your UAE TRN (Tax Registration Number)
- Invoice date
- Client name and address (for B2B: client’s TRN if they are VAT registered)
- Item/service description; quantity; unit price
- Subtotal (before VAT)
- VAT rate applicable (5%, 0%, or exempt statement)
- VAT amount (AED)
- Total invoice amount (AED)
UAE VAT for Free Zone Companies — Key Rules
- Services exported from UAE FZ to non-UAE client: ZERO rated VAT (0%); the service is consumed outside UAE
- Services to UAE mainland clients: STANDARD rated (5%); charge 5% VAT if VAT registered
- Designated zone transactions: complex rules; goods in JAFZA (designated zone) to UAE mainland — VAT applies as if import
UAE VAT Recovery on Business Expenses
- If VAT registered: recover input VAT (VAT paid on your business purchases) by claiming it on your quarterly VAT return
- Example: paid AED 1,000 VAT on office supplies; claimed as input VAT on return; reduces your net VAT liability
- Cannot recover VAT on: entertainment expenses; personal use goods; blocked items under UAE VAT law
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