Pyalm Books
By Fadhil Abdulla

How to Calculate 5% VAT in the UAE (Add, Remove and Reverse VAT)

Adding and removing 5% VAT trips up a lot of business owners. Here's the simple maths — and a free calculator that does it instantly, including reverse VAT and profit after VAT.

The 5% that everyone gets slightly wrong

UAE VAT is charged at a standard rate of 5%, but moving between net (pre-VAT) and gross (VAT-inclusive) amounts confuses a surprising number of businesses. Get it wrong and your invoices, pricing, and VAT return all drift out of line.

Adding VAT

To add VAT to a net price, multiply by 1.05.

AED 1,000 net × 1.05 = AED 1,050 gross — of which AED 50 is VAT.

Removing VAT (reverse VAT)

This is where mistakes happen. To extract VAT from a VAT-inclusive total, you divide by 1.05 — you do not simply take 5% off.

AED 1,050 gross ÷ 1.05 = AED 1,000 net, so the VAT is AED 50.

Taking 5% off AED 1,050 would give AED 52.50 — wrong. The free VAT Calculator handles this correctly in its Reverse VAT mode.

Profit after VAT

If you price on a VAT-inclusive basis, your real profit is easy to misjudge. Enter your cost and your VAT-inclusive selling price into the calculator's Profit after VAT mode to see the net sale value, the VAT you owe, and what you actually keep.

Who needs to register for VAT?

Registration is mandatory when annual taxable supplies exceed AED 375,000, and voluntary between AED 187,500 and AED 375,000. Registered businesses charge VAT on sales and reclaim VAT on eligible purchases.

From calculator to compliant returns

A calculator answers one question at a time. To track VAT across every invoice and expense and file an FTA-ready return, Pyalm Books keeps the whole picture for you.

Use the free VAT Calculator | Learn about Pyalm Books

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Get UAE VAT & E-Invoicing Ready

Pyalm Books handles VAT, PINT AE e-invoices, and FTA returns for Dubai businesses — no extra development cost.

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