Output Tax (Output VAT)
VAT charged and collected on sales of goods and services that must be remitted to the Federal Tax Authority.
What is Output Tax?
Output Tax, also known as Output VAT, is the Value Added Tax that a VAT-registered business charges and collects from customers when selling goods or services. This VAT must be remitted to the Federal Tax Authority (FTA) after deducting any recoverable Input Tax (VAT paid on purchases).
How Output Tax Works
When you make a taxable supply (sale), you must charge VAT at the applicable rate and issue a tax invoice showing the VAT amount separately. The VAT you collect becomes Output Tax that you owe to the FTA.
Output Tax collected minus Input Tax paid equals net VAT payable to the FTA
Output Tax Rates in UAE
Most goods and services
Exports, international transport, certain healthcare and education
Financial services, residential property, bare land
When to Charge Output Tax
- Sale of Goods: Charge 5% VAT on most goods sold in the UAE
- Provision of Services: Charge VAT on services provided to customers in the UAE
- Commercial Property Rental: VAT applies to commercial property leases and rentals
- Imports: VAT is charged on goods imported into the UAE (paid at customs)
Calculating Output Tax
Output Tax is calculated based on the selling price (excluding VAT) multiplied by the applicable VAT rate:
Tax Invoice Requirements
When charging Output Tax, you must issue a tax invoice containing:
- 1 Tax Invoice Number: Unique sequential invoice number
- 2 Supplier TRN: Your 15-digit Tax Registration Number
- 3 Date of Issue: Invoice date
- 4 Description: Details of goods or services supplied
- 5 VAT Amount: Total VAT charged shown separately
- 6 Customer Details: Name and address (TRN for B2B transactions over AED 10,000)
Timing of Output Tax Recognition
Output Tax must be accounted for in your VAT return based on the earlier of:
Invoice Date
When you issue a tax invoice to the customer
Payment Date
When you receive payment from the customer
Special Output Tax Situations
- Deemed Supplies: Business assets used for non-business purposes require Output Tax accounting
- Advance Payments: VAT is due when you receive a deposit or advance payment
- Discounts: Output Tax is calculated on the discounted price if known at time of supply
- Bad Debts: You can reclaim Output Tax on unpaid invoices after 6 months
Related Terms
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