The UAE VAT rate is a flat 5%, which makes the maths friendlier than in many countries — but people still get tangled up, especially when working backwards from a VAT-inclusive price. Here are the two calculations you'll actually need, with worked examples you can copy.
Adding VAT to a net price
This is the common case: you have a price before tax and want the VAT-inclusive total. Multiply by 0.05 for the VAT, then add it on.
- VAT amount = net price × 0.05
- Gross (total) price = net price × 1.05
Example: your service is AED 1,000 before VAT. VAT = 1,000 × 0.05 = AED 50. Total payable = 1,000 × 1.05 = AED 1,050. On your invoice you'd show net 1,000, VAT 50, and gross 1,050 — always displayed separately.
Removing VAT from a gross price
This trips people up. If a price already includes 5% VAT and you need to work out the VAT portion, you can't just take 5% of the gross — you have to divide it out. The gross represents 105% of the net, so:
- Net price = gross price ÷ 1.05
- VAT amount = gross price − net price (or gross × 5 ÷ 105)
Example: a VAT-inclusive price is AED 1,050. Net = 1,050 ÷ 1.05 = AED 1,000. VAT = 1,050 − 1,000 = AED 50. Notice the VAT here is AED 50, not AED 52.50 — taking a naive 5% of the gross would overstate it. That's the mistake to avoid.
A quick sense-check
The VAT fraction for a 5% inclusive price is 5/105, which is roughly 4.7619% of the gross. So on any VAT-inclusive amount, the tax portion is a shade under 5% of the total — a handy way to sanity-check a figure.
Showing it correctly on invoices
Whichever way you calculate, a compliant UAE tax invoice must show the net amount, the VAT amount, and the gross total separately, with VAT expressed in AED. Lumping it into a single 'total incl. VAT' figure isn't enough on a formal tax invoice.
Skip the maths entirely
You don't have to do any of this by hand. Our free UAE VAT calculator adds or removes 5% VAT instantly, and Invoex does it automatically on every invoice — enter your prices, set the 5% rate, and net, VAT and gross are calculated and laid out correctly for you, every time. For what else a valid invoice needs, see our UAE VAT invoice requirements guide.
This article is general information. The standard UAE VAT rate is 5% at the time of writing; always confirm the current rate and rules with the FTA.