Article 53 of Federal Decree-Law No. (8) of 2017 on Value Added Tax, describes the method to Calculate UAE VAT Payable to FTA(Federal Tax Authority).
The above article means, Your the Output Tax less of Recoverable Input Tax is equal to Tax Payable.
Hence, the formula to Calculate UAE VAT payable is as below:
Output VAT – Recoverable Input VAT = VAT payable.
To know more about UAE VAT Recoverable Input Tax click on the link below:
To download the Federal Decree-Law No. (8) of 2017 on Value Added Tax click on the link below:
Federal Decree-Law No. (8) of 2017 on Value Added Tax
From Jan 2018, VAT is all set to be implemented in UAE. It is necessary for businesses to get ready for VAT compliances.
Businesses will have to maintain records, collect and pay VAT, the filing of VAT returns etc. all in accordance with the VAT Law.
Let us understand the above with the help of an example.
You purchase good from a distributor.
Distributor Price – AED 10,000.
5 % VAT Paid – AED 500.
Purchase price – AED 10,500.
Now you sell the above goods to your customers.
Your Price – AED 11500.
5 % VAT Collected – AED 575.
Your Sale Price = 12075.
How to Calculate UAE VAT Payable?
VAT collected – VAT paid = VAT Payable
AED 575 – AED 500 = AED 75
Thus AED 75 is your payable amount to FTA.
You can download UAE centric Accounting Templates like UAE Invoice Template, UAE Invoice Template in Arabic, UAE VAT Debit Note, UAE VAT Purchase Register and UAE VAT Credit Note etc.
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If you have any queries please share in the comment section below. I will be more than happy to assist you.
sir kindly let me know how to calculate vat of a laundry shops
please this is my contact number 050-2031041 and e mail id is ahmedejaz518@gmail.com send in details please
thanks
ejaz ahmed
Usually, the same invoice format is issued for laundry business. The number of clothes X Price per cloth X VAT %. Please describe your process in detail.
Hi,
I want to know how can we sale invoice maintain for retails shop.
I am a grocer,we have sale items from 1dhs. how can I collect tax for this items.
Thanking you.
A simple invoice has to be issued in this case. In the first place, you need to register only if your turnover is over AED 375,000. If so you will issue a tax invoice with simple details containing the product description as well as the amount to end customers. For more details, you can contact the FTA via email or phone numbers. info@tax.gov.ae
sir,
can we less also from payable VAT. expense like on machine maintenance vehicle maintenance etc.
Any business expense amount paid with VAT can be claimed except the entertainment and as specified by FTA. According to the ruling, maintenance of the machinery is a business expense and can be claimed as Input. Thanks and regards.
Can we claim VAT Credit on Petrol Bills for which the Vehicle is used by Office driver for office use
If the receipt contains the company vehicle number then claimable. Again if the vehicle is used for other than business purpose then it might not be claimable. Emarat, ADNOC issue prepaid cards for companies. Those receipts have company names on it and VAt can be claimable.
Hello Sir,
I noticed that when a company is using any type of visa or master card then vehicle number is not specifying on that bill in that case what should we do with that type of petrol bills?
Petrol bills have been an issue for the people. Many have the same question just like you. I m not a legal adviser. According to the best of my knowledge using this bills to card slips to claim input would create discrepancies with FTA as we all know they are on the personal name.
The solution which I have provided many times earlier is that the companies can use prepaid petrol cards issued by companies like Emarat and Adnoc. Where the company will issue a card and issue a receipt/invoice with company name and TRN and it would the all according to the rule mentioned in VAT law for claiming your input. That expenses will be directly reported in your books of accounts.
Dear Sir,
Kindly let me know can we claim the VAT on; like if company purchase wifi router, a landline telephone for office use, VAT on these kinds of expenses is claimable?
Any purchase made for office use and if the tax invoice consists of the company name and company TRN number as per the law is claimable.
Sir, For pets & aqua-phonic shop how can i calculate VAT ?
5 % applicable to you. Your purchase + maintenance expenses (food, etc) = Final amount X 5% VAT.
IF you have paid VAT on any expenses for taxable supply you can claim input.
Sir, my business turnover is less than AED 375,000 in the previous year. i volunterly registered for VAT and i invoiced with vat . now i have to return the tax. so is it mandatory to return the tax whose turnover is less.
If you are registered it is mandatory to file the return.
Hi
How calculate the rent vat , for example we have paid 5% for one year in advance. Now we want calculate our first quarter payable vat. We should devide the paid vat for rent to 12 and then count only 3 month? Or total paid is counting as paid vat for first quarter.?
Also for the businesses like tailoring , we buy raw material and sell readymade after doing some work on them and paying salary …. . So always gap between paid and received vat is too much and sometimes our payable vat is more than our profit
Thanks
f the VAt is paid in full to your client then it should be reported as the whole amount. If against PDC cheques then the amount will be reported as paid. THere is no pro-rata basis. if you pay whole year rent in one amount and it has been paid to the client then it has to be reported in full.
The scenario you are saying for input-output vat is not possible. Because the amount you pay for tailoring material will be less always and the finished goods amount will be higher and so the vat collected on it will be higher.Please consult any tax consultant for this. I presume you might be making a mistake in calculating the output and input vat.
Sir,
Please let me know about VAT on rent, our company paid VAT on rent to the real estate, but Invoice date for the VAT is 5th of April for all remaining period for our contract ending on August 2018. Shall I include this VAT on Prorata basis to first quarter expenses?
If the VAt is paid in full to your client then it should be reported as the whole amount. If against PDC cheques then the amount will be reported as paid. THere is no pro-rata basis. if you pay whole year rent in one amount and it has been paid to the client then it has to be reported in full.
dear sir how can i calculate VAT for garment retail shop( boutique)
VAT calculation for everyone is same. Output VAT – Input VAT + RCM = VAT Payable
sir what are sub ledgers are including in VAT COLLECTED MAIN LEDGER & VAT PAID MAIN LEGER.
I mean vat collected -vat paid = net vat payable
for example vat collected if in the case of supermarket is items sold to the costumer ,
for example vat paid if in the case of supermarket is purchasing goods from supplier .
please i expecting you highly valuable response .
thanking you
VAT paid against RCM for imports will be reported in sub ledger which is created for RCM. Similarly, Input VAT of RCM, Input VAT of normal Purchase, are sub-ledgers. If this doesn’t apply to you and you don’t import goods from abroad. Your purchase and sales are local, then
VAT Payable = VAT collected – VAT paid on the purchase
Hello,
How to calculate the VAT, it is 5% but I noted if the bill is 100AED the vat mentioned 4.76AED on bill why? it supposed to be 5AED.
Thanks & Regards
Saleh
You are right it is supposed to be 5 instead of 4.76. There might be some calculation mistake. Either the bill is wrong or the taxable amount must not be 100. it will be 95. B’coz 5 % of 95 is 4.75 and this inclusive of taxable amount is 99.75 and rounded off to AED 100. Hope matter clarified.
sir my name mahesh i have the bill including tax amount, i want know how much tax paid ,
please give me the formula for sorting
It is very simple mahesh. The taxable amount multiplied by VAT 5% is your tax amount. If the taxable value isn’t shown on the tax bill that bill itself is wrong and you must demand the proper bill from your supplier.
GOOD DAY,
LAST THREE OUR COMPANY TOTAL SALE 500000 TOTAL VAT 25000.
WE GET PAYMENT ONLY 300000 AED WE GET VAT FROM CUSTOMER 15000.
OTHER 200000 AND 10000 VAT WE WILL GET AFTER TWO MONTH. 60 DAYS CREDIT PERIOD.
HOW MUCH I SHOULD PAY VAT NOW 15000 OR 25000
PLEASE email me
samirsarker93@gmail.com
Full 25000 VAT will be reported. If the material not received or in case of nonpayment that will be reversed in the book of account through credit note and also in vat Return in adjustments section.
Sir, sorry for disturb,
what is the meaning of vat input ? if in the case of supermarket ,what are things are including in the vat input?
what is the meaning of vat output? if in the case of supermarket ,what are things are including in the vat output?
i am totally confused , meanwhile i am thinking vat input means total sales & vat out put means total purchase & expenses related to the company . is it right sir?
i hoping yours highly response.
thanking you
What is VAT Input? The answer is given in below link:
https://exceldatapro.com/uae-vat-recoverable-input-tax/
Simple to understand.
Output VAT = Sales (VAT you collect from your customer on your invoice), Only VAT amount is to be considered not the invoice amount.
Input VAT = Purchases on which VAT is paid and Expenses on which VAT is paid for making the taxable supply. Only VAT amount is to be considered not the total amount.
Sales VAT – Purchase and Expenses VAT = VAt payable
For eg: you have Sales of 10000 AED and your VAT is 500 AED. Your Purchase is 7000 AED and your VAT paid on Purchase is 3500 AED.
Thus 5000 (Sales VAT) – 3500 (Purchase VAT + Expensed VAT) = 1500 (VAT Payable)
Sales, purchase or expenses on which vat is paid will only be considered. No transaction without vat will be included in the vat calculations
we purchase uniform(finished goods)from outside.on the shirt pocket our company name mentioned.is it applicable for vat?
my doubt is,the material stitching person include his service charge inside the uniform cost.
means service tax and sales tax are different.then how we manage tax in this kind of expenses?
I am unable to get what you mean to ask. What do you mean by outside? Is it import or local? If you sell then you need to collect VAT. it doesn’t have anything to do with the company name on the shirt pocket.
Sir, I have paid my 2nd period of VAT now to UAE FTA, we used to paid from the accounting company, which i still not feel satisfied if we calculated the VAT we Collected with what he submitted feel like something wrong. let me ask you is this formula correct?
Example: My Sale Total include VAT 5% is 200,000.
He will calculated as : 200,000 X 5: 105=9,523.81 this amount i should paid to FTA is this correct?
That mean my selling is 190,476.19???
Please explain.
What I can understand from your query is as follows:
You sell goods on MRP. your price includes the VAT amount. For example, you sell something worth AED 1000 then AED 47.62 VAT and AED 952.38 is your selling price. In this scenario, your calculation is right.
But if you are not selling goods inclusive of tax amount then the calculation will be as follows:
You sell something worth AED 1000 and 5 % VAT will be charged. Thus your calculation will AED 1000 + 50 VAT. Hope it is clear with you now.
Purchase : does it also include grocery , car fuel, car maintenance , house rent , school fees apart from company purchase ?
No. You can’t include any personal expenses in company purchases.