For decades, the Gulf was known for having almost no taxes. That changed when the UAE and Saudi Arabia introduced value-added tax in 2018. Saudi Arabia later raised its rate. Pakistanis living, working or shopping in these countries see VAT on almost every receipt. This guide explains VAT in the UAE and Saudi Arabia, and how to calculate it with our VAT Calculator by Country tool.
UAE
- Introduced: 1 January 2018
- Standard rate: 5%
- Some items are zero-rated or exempt, such as certain education, healthcare and residential property supplies, under specific conditions.
Saudi Arabia
- Introduced: 1 January 2018 at 5%
- Raised to 15%: in July 2020
- Some supplies are zero-rated or exempt under the rules.
Calculating VAT on a price
| Country | Net price | VAT | Total |
|---|---|---|---|
| UAE | AED 1,000 | AED 50 | AED 1,050 |
| Saudi Arabia | SAR 1,000 | SAR 150 | SAR 1,150 |
Removing VAT from a receipt
Net = total ÷ 1.05 (UAE) or ÷ 1.15 (Saudi Arabia)
An AED 840 bill includes AED 40 of VAT. A SAR 575 bill includes SAR 75 of VAT.
Reading receipts
Receipts from registered businesses show a tax registration number, the VAT amount and the total. Keep receipts for large purchases in case you need them for warranty or refunds.
Tourist VAT refunds
The UAE runs a tourist VAT refund scheme for eligible purchases taken out of the country. Saudi Arabia has its own arrangements. Check conditions at the time of travel.
For businesses
Businesses above set turnover thresholds must register for VAT and file returns. Invoices must meet local requirements. For general invoice layout, see the Invoice Generator.
Converting to rupees
Convert totals with the AED to PKR or Currency Converter tools. For a global overview of rates, read VAT rates around the world.
Impact on everyday budgets
For families, VAT adds a noticeable amount to everyday spending in Saudi Arabia at 15%, and a smaller amount in the UAE at 5%. When budgeting, include VAT in prices for groceries, restaurants, electronics and services. Rent on residential property is often treated differently from commercial rent, so check how it applies to your situation.
Frequently asked questions
What is the VAT rate in the UAE?
5%.
What is the VAT rate in Saudi Arabia?
15% since July 2020.
How do I remove VAT from a Saudi receipt?
Divide the total by 1.15.