Short answer: To remove 5% VAT from a UAE gross price, divide by 1.05. The VAT portion is gross x 5 / 105. Subtracting 5% from the gross is wrong because the gross is 105% of the net, not 100%.
The reverse VAT formula
Net = gross / 1.05 and VAT = gross - net. The same VAT amount can be written as gross x 5 / 105. For a 5% rate, 105 is the key number: 100 parts net plus 5 parts VAT.
Why subtracting 5% is wrong
If you take 5% off AED 1,050, you get AED 997.50. The correct net is AED 1,000. The difference is AED 2.50 on a small invoice, but it grows quickly on rent, equipment or monthly bills. Accountants call this the reverse VAT or VAT-inclusive calculation.
- Wrong: gross x 0.95.
- Right: gross / 1.05.
- VAT portion: gross x 5 / 105.
When you need to remove VAT
- A customer quotes a VAT-inclusive shelf price and you need your net revenue.
- You are checking whether a supplier invoice added VAT correctly.
- You are reimbursing an employee for a purchase that included VAT.
- You are preparing bookkeeping entries and need the input VAT figure.
- You are comparing a UAE price with a net price from another country.
Reverse VAT examples in AED
- AED 105 gross: net AED 100, VAT AED 5.
- AED 525 gross: net AED 500, VAT AED 25.
- AED 1,050 gross: net AED 1,000, VAT AED 50.
- AED 5,250 gross: net AED 5,000, VAT AED 250.
- AED 10,500 gross: net AED 10,000, VAT AED 500.
Use the calculator instead of hand maths
The UAE VAT calculator has a Remove VAT mode. Type the gross amount, choose Remove VAT, keep the rate at 5% and press Calculate. The result shows net, VAT and gross separately so you can copy the right line into your books.
For a single invoice line, the calculator is enough. For a full VAT return, total the net and VAT for each rate group separately. Do not add gross totals from different rates and reverse them in one step.
Keep the audit trail
Save the original invoice, not just the calculator result. A VAT calculation is a check; the tax invoice is the supporting document. If the invoice is in a foreign currency, keep the conversion working and follow FTA rules for the VAT amount.
Frequently asked questions
What is the reverse VAT formula for 5%?
Net = gross / 1.05 and VAT = gross x 5 / 105. For AED 1,050 gross, net is AED 1,000 and VAT is AED 50.
Why is removing VAT not the same as a 5% discount?
A discount is taken from the gross selling price. VAT was added to the net price, so the gross contains 105%. Dividing by 1.05 reverses the addition correctly.
Can I remove VAT from a total that includes multiple rates?
No. Split the invoice into rate groups first, then reverse each group separately. One blended rate will not be accurate.
Does the calculator work for 0% VAT?
Yes. At 0% the net and gross are the same and the VAT line is zero.
Reverse a VAT-inclusive price
Enter the gross amount and get net plus VAT in AED.
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Published 2026-10-30 by Wafa Smart Tech, Lahore. This is general information, not legal, tax or financial advice. Confirm current rules with the relevant authority or a qualified professional.