Is VAT already included in UAE prices or added at checkout?

Dubai: In most countries with a Value Added Tax (VAT), the tax is already included in the advertised price and the same applies in the UAE, where VAT is set at 5 per cent. The UAE’s VAT legislation requires that all displayed and advertised prices be inclusive of VAT, a rule designed to promote transparency and protect consumers.

According to the Federal Tax Authority (FTA), prices displayed to consumers for goods and services in the UAE must include VAT. This rule ensures that pricing remains clear and that customers are not misled about the total amount they will pay at checkout.

Displaying product prices without including the tax amount is considered a violation of UAE tax laws. This practice can mislead consumers into thinking they are paying less than they actually are, only to discover additional charges at the point of sale.

To avoid confusion and ensure compliance, the FTA has urged VAT-registered businesses to fully follow the law. Those who fail to display tax-inclusive prices face an administrative penalty of Dh5,000.

The FTA also advises consumers to check their tax invoices carefully. A proper tax invoice should:

Tax invoices protect both buyers and sellers, ensuring transparency and helping to combat tax evasion.

If you find a store or service provider not following these guidelines, you can report it directly to the FTA. Complaints can be filed by calling the authority - 800 82923 or submitting details through the FTA’s official website - tax.gov.ae

Even in countries where VAT is included in prices, eligible tourists may still claim tax refunds on certain purchases when leaving the country. In such cases, the VAT is part of the purchase price but can be reimbursed later through approved refund channels.

In the United States, sales tax rates differ from state to state and even between local jurisdictions. Because of this variation, retailers typically display prices before tax, with the final amount, including the applicable sales tax - calculated and shown at the point of checkout.

By contrast, the UAE’s pricing system follows the approach used in many other countries where VAT is already included in the listed price. The amount you see on the product tag, shelf label, or menu is the total amount you pay.

This tax-inclusive pricing model is standard practice across Europe and in several other nations, including Bahrain, Oman, Switzerland, and Vietnam, ensuring clarity and consistency for consumers.