Welcome to UAE VAT Calculator 2025
UAE VAT CALCULATOR
VAT (Value Added Tax) was officially introduced in the United Arab Emirates on January 1, 2018. This VAT applies to most goods and services, but there are exceptions that may qualify for either a 0% VAT rate or full exemption, based on specific criteria.
✅Standard VAT Rate: 5% The majority of goods and services in United Arab Emirates (UAE) are subject to the standard VAT rate of 5%.
✅Zero VAT Rate (0%): In the UAE applies to exports outside the GCC, international transportation, crude oil and natural gas supplies, the first sale of residential real estate, as well as sectors like healthcare and education.
✅VAT-Exempted : Certain services in the UAE, such as financial services, subsequent supplies of residential real estate, transactions involving bare land, and domestic passenger transport, are fully exempt from VAT.
You can use our UAE VAT calculator to easily calculate VAT for all UAE emirates, including Dubai, Abu Dhabi, Sharjah, Fujairah, Ajman, Ras Al Khaimah, and Umm Al Quwain.
United Arab Emirates Value-added Tax
The Federal Tax Authority (FTA) introduced Value Added Tax (VAT) in the United Arab Emirates (UAE) through Federal Decree-Law No. 8 of 2017, effective from January 1, 2018. VAT is an indirect tax imposed on the supply of goods and services, charged at each stage of the supply chain. While registered taxpayers collect the VAT on behalf of the government, the end-consumer ultimately bears the cost of VAT, contributing to the UAE’s public revenue.
The UAE government provides top-quality public services, including education, healthcare, social services, and public transportation. The introduction of VAT in the UAE helps diversify the country’s revenue streams, ensuring sustainable funding for these services. This additional revenue source supports the continued high standard of living in the UAE and contributes to its long-term economic growth.
Standard VAT Rate in Untied Arab Emirates (UAE)
The UAE VAT rate is set at a standard rate of 5% and applies to most goods and services across the United Arab Emirates. This VAT rate is applicable to a wide range of products and services, including consumer goods, electronic devices, food items, clothing, and professional services such as consulting and legal services. Additionally, VAT is charged on imported goods and luxury items. However, some sectors like healthcare, education, and specific financial services are either zero-rated or exempt from VAT in the UAE. The implementation of this tax system is part of the government’s effort to diversify revenue sources and ensure the continued growth of the UAE’s economy.
VAT Rate On Real States in the UAE
In the UAE, the VAT treatment of real estate differs based on whether the property is commercial or residential. Commercial properties, including sales or leases, are taxable at the standard VAT rate of 5%. However, the supply of residential properties is generally exempt from VAT, ensuring that VAT does not become an unrecoverable cost for individuals purchasing their own homes. To support real estate developers, the first supply of residential properties within three years of their completion, at the time of VAT introduction, is zero-rated, allowing developers to recover VAT on the construction of these properties.
To easily reclaim VAT on residential properties, use our UAE VAT Calculator and quickly calculate the VAT for your property transactions.
Zero-rated VAT Sectors in the UAE
The UAE VAT system includes a 0% VAT rate for certain goods and services. This tax rate is applied to specific categories to promote exports and essential sectors like healthcare, education, and transportation. These exemptions ensure that certain goods and services are not taxed, benefiting businesses and consumers alike in the UAE.
VAT-exempt Sectors in the UAE
Certain supplies in the UAE are exempt from VAT, which helps support essential services and ensure that tax burdens are kept low for specific sectors. These exemptions are designed to provide relief for industries like financial services, real estate, and transportation.
- Financial services, as clarified in the VAT legislation
- Residential properties, including certain sales and leases
- Bare land transactions
- Local passenger transport services
Partial Exempted VAT
In the UAE, businesses registered for VAT can recover input tax on business expenses if they relate to taxable supplies. If the expense is associated with a non-taxable supply (such as exempt supplies), the input tax may not be recoverable. For businesses involved in activities that include both taxable and non-taxable (exempt) supplies—like those in the banking sector—they must apportion the input tax between the two categories.
Businesses can initially use the input tax ratio (recoverable to total) for apportionment, though other methods may be applied with approval from the Federal Tax Authority (FTA). This ensures accurate VAT management and compliance with UAE tax laws.
VAT Registration in UAE
In the UAE, businesses must meet certain criteria for VAT registration. The mandatory VAT registration threshold for UAE resident businesses is AED 375,000, while the voluntary registration threshold is AED 187,500. Non-resident businesses making supplies that require UAE VAT to be charged must register, regardless of their turnover. VAT grouping is also permitted, provided specific conditions are met.
Businesses must adhere to stringent documentary and record-keeping requirements, including issuing tax invoices and submitting VAT returns either quarterly or monthly, depending on the Federal Tax Authority (FTA) allocation. If a business incurs excess input VAT, it can typically recover this amount through a formal procedure or carry the VAT credits forward to offset future output VAT.
Failure to comply with VAT obligations can result in substantial fines and penalties, which can include both fixed and tax-geared penalties.
Customs Duties
The UAE imposes customs duties on all goods imported into the country, with a general duty rate of 5% based on the cost, insurance, and freight (CIF) value. Certain goods, like alcohol and tobacco, may be subject to higher rates, while specific exemptions and reliefs apply. Additionally, the UAE enforces anti-dumping duties on imports such as car batteries, ceramic tiles, and hydraulic cement, with rates up to 67.5% of the CIF value.
As a member of the GCC Customs Union, the UAE removes customs barriers with other GCC countries. The country also offers duty-free access to imports from countries with which it has Free Trade Agreements, such as Singapore, Israel, and Turkey.
Excise Taxes in the UAE
The UAE introduced excise tax on certain products to discourage the consumption of harmful goods. The tax rates are as follows:
- 100% tax on tobacco, electronic smoking devices, and energy drinks
- 50% tax on carbonated drinks and sweetened drinks
Municipal or Property Tax
Most emirates, including Dubai, impose a municipality tax on properties, based on the annual rental value. For commercial properties in Dubai, the tax is 2.5% (paid by property owners), while for residential properties, it’s 5% (paid by tenants). A land registration fee of 4% applies to property transactions in Dubai.
Stamp Taxes
Currently, the UAE does not levy any separate stamp taxes.
Payroll Taxes
The UAE does not impose a personal income tax, which means there are no payroll tax withholding obligations for employers.
Social Security Contributions
Social security contributions apply only to UAE nationals and GCC nationals working in the UAE. For UAE nationals (except those in Abu Dhabi), contributions are set at 20% of the employee’s gross salary, with 5% paid by the employee, 12.5% by the employer, and 2.5% by the government. In Abu Dhabi, the contribution rate is 26%, with the employer’s share increased to 15%.
For GCC nationals, contributions are based on their home country’s social security regulations. Employers must also contribute to the DIFC Employee Workplace Savings Scheme (DEWS), introduced in Dubai to replace the End of Service Gratuity (EOSG), with monthly contributions based on the employee’s basic salary.