Output tax: what it means in UAE tax.
The meaning of output tax under UAE VAT law: how it works, a worked example in AED, common mistakes and the legal references.
Output tax is the VAT a registered UAE business charges on its taxable sales and owes to the FTA, less any input tax it can deduct.
What output tax means
Also called: Output VAT.
Output tax is the VAT that a registered business charges on its taxable supplies, and on anything the law treats as a taxable supply, such as a deemed supply. In the UAE the standard rate is 5%, applied to the value of the supply. Zero-rated supplies carry output tax at 0%.
The business collects output tax from its customers but does not keep it. At the end of each tax period it adds up its output tax, subtracts the input tax it is entitled to deduct, and pays the difference to the Federal Tax Authority. If input tax is higher, the business has an excess that can be refunded or carried forward.
For an SME, output tax is a liability from the day of supply, not from the day the customer pays. Treating it as income, or spending it before the return is due, is a common cash flow trap.
How it works
- Output tax is calculated at 5% of the value of each standard-rated supply, or 0% for a zero-rated supply.
- It becomes due on the date of supply, which is often the earlier of the invoice date or the payment date.
- Payable tax for a period equals total output tax less total recoverable input tax for the same period.
- Any amount shown as VAT on an invoice must be paid to the FTA, even if VAT should not have been charged.
- The VAT return and payment must reach the FTA by the 28th day after the end of the tax period, unless the FTA directs another date.
Worked example
A café in Dubai files a quarterly VAT return. All of its food and drink sales are standard-rated.
| Sales before VAT | AED 300,000 |
| Output tax at 5% | AED 15,000 |
| Recoverable input tax on purchases | AED 9,000 |
| Payable tax for the quarter | AED 6,000 |
The café pays the FTA only the difference between the VAT it charged and the VAT it can deduct.
Common mistakes
- Calculating 5% on a VAT-inclusive total. The VAT inside an inclusive price is 5/105 of it, not 5%.
- Reporting output tax when cash is received instead of on the earlier date of supply, such as an invoice date.
- Leaving out deemed supplies, such as business goods taken for personal use, from output tax.
The law
- Federal Decree-Law No. 8 of 2017 on Value Added Tax, Article 1 (definition of Output Tax), Article 3 (5% rate) and Article 53 (payable tax)
- Federal Decree-Law No. 8 of 2017 on Value Added Tax, Article 65, Clause 4 (tax shown on an invoice must be paid)
- Cabinet Decision No. 52 of 2017 (Executive Regulation of the VAT law), Article 64 (return and payment deadline)
Frequently asked questions
Do I owe output tax if my customer has not paid me yet?
Usually yes. Output tax is due by reference to the date of supply, which includes the date the tax invoice is issued. Bad debt relief is a separate process with its own conditions.
Is output tax charged on exports?
Exports that meet the conditions are zero-rated, so output tax is charged at 0%. They are still reported in the VAT return.
Related terms
Input tax · Taxable supply · Time of supply · Zero-rated supply · Deemed supply. See every term in the UAE tax glossary.
For the full picture, read our guide: UAE VAT Filing Calendar 2026: Every Quarterly Deadline.
Need help with VAT returns? See our VAT returns service.
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