# UAE VAT profit margin scheme calculator

> Under the profit margin scheme, a dealer in second-hand goods, used cars, antiques or collectors' items charges VAT only on the margin: VAT = (selling price − purchase price) × 5/105. It applies only where no input VAT was recovered on the purchase, and the invoice must not show VAT separately.

Interactive calculator: https://www.countify.ae/tools/vat-profit-margin-scheme · Updated 2026-10-14 · Countify UAE

## Margin scheme vs normal VAT on a used car

Bought from a private seller for AED 40,000.

| Sold for | VAT due under the scheme | VAT if charged on the full price | Saving from the scheme |
| --- | --- | --- | --- |
| AED 42,000 | AED 95.24 | AED 2,000.00 | AED 1,904.76 |
| AED 46,300 | AED 300.00 | AED 2,204.76 | AED 1,904.76 |
| AED 52,500 | AED 595.24 | AED 2,500.00 | AED 1,904.76 |
| AED 60,000 | AED 952.38 | AED 2,857.14 | AED 1,904.76 |

The invoice must not show VAT separately, and the buyer cannot recover it.

## When you can use the scheme

The scheme covers used goods, antiques and collectors' items bought from someone who did not charge VAT (for example a private individual) or who used the margin scheme themselves. You must keep a stock record of each item with purchase and selling prices. If you recovered input VAT on the purchase, normal VAT applies to the full price.

## Invoicing under the margin scheme

The invoice should state that VAT is charged on the profit margin and not show a separate VAT amount, so a VAT-registered buyer cannot recover it. Report the margin VAT in box 1 of your [VAT return](https://www.countify.ae/tools/vat-return-calculator).

## Legal basis

- Federal Decree-Law No. 8 of 2017, Article 29; Executive Regulation, Article 29 (https://tax.gov.ae/en/legislation.aspx)

## Frequently asked questions

### How is VAT calculated under the margin scheme?

Multiply the margin (selling price minus purchase price) by 5/105. If you sell at a loss, no VAT is due.

### Can a car dealer use the margin scheme in the UAE?

Yes, for used cars bought without recoverable VAT, such as from private sellers.

### Can the buyer reclaim margin scheme VAT?

No. No VAT is shown on the invoice, so the buyer has nothing to recover.