Output VAT on sales less input VAT on purchases.
Net VAT due
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Output VAT
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Input VAT
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You are a collector, not the one taxed
The single idea that makes VAT make sense is that a registered business is collecting tax for the government, not paying tax on its own income. On every taxable sale you charge VAT on top of your price, the rate this calculator applies being 5 percent, and that money is never yours. It belongs to the Federal Tax Authority. On every taxable purchase you pay VAT to your suppliers, and that money is recoverable. Your VAT return reconciles the two. The output VAT you collected, minus the input VAT you paid, is what you hand over. If you paid more than you collected, the FTA owes you the difference. Confirm the current standard rate with the FTA, since 5 percent is the figure the tool models rather than one it certifies as unchangeable.
Because the tax flows through the chain and each business only remits the VAT on the value it added, the final consumer ultimately bears the cost. That is why a healthy, growing business with normal margins almost always sits in a payable position: it sells more than it buys, so it collects more VAT than it pays.
Netting a quarter with AED 500,000 of sales
Take the default figures, computed with the rate this calculator applies. Net taxable sales of AED 500,000 and net taxable purchases of AED 300,000, both shown before VAT. Output VAT is 5 percent of sales, AED 25,000. Input VAT is 5 percent of purchases, AED 15,000. The net VAT due is the difference, AED 10,000, payable to the FTA.
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The chart sets output VAT against input VAT, with the gap between them being what you remit.
One subtlety the example hides: the calculator works from net, VAT-exclusive figures. If you pull totals straight from invoices that already include VAT, you would double count. Enter the pre-VAT value of your sales and purchases, or strip the VAT out first, so the 5 percent is applied once and only once.
When the FTA owes you
Flip the inputs so purchases exceed sales and the result turns negative, which the tool reads as a refund position. This is normal in specific situations: a startup buying equipment before it earns much, an exporter whose sales are zero-rated so they generate no output VAT while purchases still carry recoverable input VAT, or any quarter with heavy capital spending. In a refund position you can claim the money back from the FTA or carry the credit forward to offset future VAT. A practical tip: not all input VAT is reclaimable. VAT on certain entertainment costs and on some personal-use vehicles is blocked, so do not assume every dirham of VAT you paid lands in your input VAT box. Keep the valid tax invoices, because the FTA can ask to see them before releasing a refund.
The common mistake here is treating the VAT you collected as cash you can spend. It is not working capital, it is a liability you are holding until the filing date. Businesses that dip into collected VAT to cover a slow month often scramble when the return falls due. Set it aside as it comes in, and the payment on your return is money you already have rather than a shock.
Questions filers ask
How often do I file a VAT return in the UAE?
Most businesses file quarterly, though the FTA assigns some larger businesses a monthly period. Your tax period and the filing deadline are set when you register and shown on the FTA portal. The return is due, and the payment must clear, within 28 days of the period end. Late filing or late payment triggers administrative penalties, so diarise the deadline rather than relying on memory.
Can I reclaim input VAT on a purchase from before I registered?
Sometimes. There are rules allowing recovery of input VAT on goods and services bought before your registration date, within set time limits and conditions, provided they relate to your taxable activity and you hold valid tax invoices. The detail is specific and worth checking with the FTA or your accountant, because the time limits differ for goods, services, and capital assets, and a wrong claim can be reversed with a penalty.