VAT and Tax on a Receipt

Every receipt in the UAE includes VAT, and when you travel or study abroad you will meet very different tax rates. Knowing how to add tax, and how to take it back out, helps you check bills, compare prices and claim refunds when you are eligible.

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VAT in the UAE: the basics

• The UAE Government portal u.ae states that VAT was introduced on 1 January 2018 and that the rate is 5 percent, charged at each step of the supply chain.
• Consumers bear the cost: u.ae describes VAT as a 5 percent increase in the cost of taxable goods and services. Tourists also pay VAT at the point of sale.
• u.ae notes that a limited number of exemptions exist; some supplies are zero-rated or exempt, so not every item carries 5 percent.
• Gulf News (October 2025), citing Federal Tax Authority (FTA) guidance, reports that displayed and advertised prices in the UAE must include VAT, so the shelf, tag or menu price should be what you pay.
• If VAT is added on top at the till, Gulf News reports that you can report it to the FTA through tax.gov.ae or on 800 82923.

Adding 5 percent VAT

• To add 5 percent, multiply by 1.05 (the multiplier method from the percentages lesson).
• Worked example: a service quoted as AED 200 before VAT costs 200 x 1.05 = AED 210 including VAT.
• Mental shortcut: 5 percent is half of 10 percent. 10 percent of 200 is 20, half is 10, so add AED 10.

Taking VAT out of a price

• To find the price before VAT, divide the VAT-inclusive price by 1.05. AED 210 / 1.05 = AED 200.
• To find the VAT inside a price, divide by 21 (because 5 out of every 105 is VAT, and 105 / 5 = 21). AED 210 / 21 = AED 10.
• Common mistake: taking 5 percent of the inclusive price. 5 percent of 210 is 10.50, which is wrong, because the 5 percent was calculated on 200, not 210.
• Receipt check: a total of AED 400 including VAT should show about AED 380.95 before VAT and AED 19.05 VAT. If the numbers are very different, ask.
• Gulf News reports the FTA advice that a proper tax invoice shows accurate tax amounts and a valid tax registration number.

VAT abroad: the same maths, different rates

• Other countries use different rates. GOV.UK lists the UK standard rate as 20 percent for most goods and services, a reduced rate of 5 percent (for example home energy and children's car seats) and a zero rate (for example most food and children's clothes).
• With 20 percent VAT, the multiplier is 1.2, and the VAT inside an inclusive price is one sixth (because 20 out of every 120 is VAT).
• Worked example: a 60 pound item including UK VAT contains 60 / 6 = 10 pounds of VAT; the price before VAT is 60 / 1.2 = 50 pounds.
• Again, taking 20 percent of 60 (12 pounds) gives the wrong VAT figure.
• In some countries tax is shown separately from the shelf price, so always check whether a price you see abroad includes tax before you budget.

Tourist VAT refunds in the UAE

• u.ae explains that eligible tourists can claim back some VAT on goods bought from retailers registered in the Tax Refund for Tourists Scheme.
• Conditions on u.ae include: the tourist must be at least 18, the minimum spend is AED 250, and the goods must leave the country with the tourist and must not have been consumed, fully or partly, in the UAE.
• u.ae states that 85 percent of the VAT is refunded, after a fee of AED 4.80 per tax-free tag.
• Worked example for a visiting relative: an AED 1,050 purchase includes 1,050 / 21 = AED 50 VAT. 85 percent of 50 is 42.50, minus 4.80 = AED 37.70 back.
• u.ae says purchases must be validated at the exit point within 90 days of purchase. The scheme is described on u.ae for tourists and visitors, so do not assume it applies to you as a UAE resident.