Whether you’re invoicing clients, buying goods and services, or preparing financial statements, accurately calculating VAT is essential. That’s why we’ve made it simple with our free VAT calculator in the UAE. Try this easy-to-use tool today and simplify your finances with QuickBooks!
In the United Arab Emirates, VAT (Value-Added Tax) is a 5% consumption tax added to the value of goods and services. Unlike sales tax, which is usually only applied at the final point of purchase, VAT is calculated and added at each stage of the supply chain so that the cost of the product or service reflects its true value.
The process of calculating VAT tracks the journey from manufacturer to wholesaler, then retailer to consumer. This process ensures that the tax is collected on the total value added to the product, prevents double taxation, and ensures the government receives the correct amount of revenue.
Business owners in the UAE are responsible for calculating and paying VAT. The QuickBooks VAT Calculator makes it quick and easy way to do so. The following VAT calculation formula can also help you make accurate calculations and informed financial decisions. Here’s how it works.
The basic formula for calculating VAT is:
VAT = Net Price x (VAT Rate / 100)
Net Price is the price of the product or service before VAT is added. VAT Rate is the percentage of VAT applied. Remember, in the UAE, the standard VAT rate is 5%.
Here’s an example:
If a product has a net price of AED 100, the VAT would be:
AED 100 * (5 / 100) = AED 5
To find the price of a product before the VAT is added in the UAE, you can use the following VAT-exclusive calculation:
Ex-VAT Price = VAT-Inclusive Price / (1 + VAT Rate)
So for example, if a product is priced at AED 100 (inclusive of VAT), the ex-VAT price would be:
AED 100 / (1 + 0.05) = AED 95.24
We took these VAT calculation formulas and used them to build the ultimate tax calculator! Here’s how it helps UAE business owners streamline their finances:
Our VAT calculator simplifies the calculation process, saving you time and effort.
Avoid errors and minimise the risk of tax penalties by using our accurate VAT calculator.
Our tax calculator can be used for multiple VAT rates and scenarios, making it suitable for any business.
VAT in the UAE has been at 5% since January 2018. This rate can be viewed as generally lower than many of the UAE’s trading partners. For example, India has a VAT rate of 18%, China has a VAT rate of 13%, Germany has a VAT rate of 19%, and the United Kingdom has a VAT rate of 20%. Understanding VAT rates helps businesses to make informed decisions about international trading and finances.
