What is VAT?
Value Added Tax is an indirect tax charged on goods and services at each stage of sale. The end consumer bears the cost, while businesses collect it and remit it to the tax authority.
The standard rate is 15% in Saudi Arabia, 5% in the UAE, Bahrain and Oman, and 14% in Egypt. Rates vary by country and change over time, so the calculator lets you enter any rate.
The VAT formulas
Adding VAT to a net amount
Gross = Net amount + VAT
Example: 1,000 at 15%: VAT = 1000 × 0.15 = 150, gross = 1,150.
Removing VAT from a gross price
This is where most mistakes happen. You cannot simply multiply the gross price by 15%, because VAT is calculated on the net amount, not the total:
VAT = Gross − Net
Example: 1,150 gross at 15%: net = 1150 ÷ 1.15 = 1,000, VAT = 150.
Watch out Multiplying 1,150 × 15% gives 172.50, which is wrong. Always divide by 1.15 when extracting VAT from a VAT-inclusive price.
Worked examples
| Case | Amount | Rate | VAT | Total |
|---|---|---|---|---|
| Service invoice | 2,000 | 15% | 300 | 2,300 |
| Retail item | 450 | 15% | 67.50 | 517.50 |
| UAE contract | 10,000 | 5% | 500 | 10,500 |
| Extract from gross | 1,150 gross | 15% | 150 | 1,000 net |
Frequently asked questions
How do I remove VAT from a gross price?
Divide the gross price by (1 + rate ÷ 100). At 15%, divide by 1.15 to get the net amount, then subtract that from the gross to get the VAT.
What is the VAT rate in Saudi Arabia?
The standard rate has been 15% since July 2020. Always check the ZATCA website for the current rules, as rates can change and some goods are exempt or zero-rated.
Why can I not just multiply the gross price by 15%?
Because VAT is calculated on the net amount, not the total. Multiplying the gross by the rate overstates the tax. Divide by 1.15 instead.
Does the calculator work for other rates?
Yes. Enter any rate such as 5%, 10% or 20% to match your country, with quick buttons for common regional rates.
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