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.
Reviewed by Countify's ACCA/FCCA chartered certified accountants · Updated
What you paid; no VAT was recoverable on it.
- Margin including VAT
- AED 6,300.00
- VAT due under the scheme
- AED 300.00
- VAT if charged on the full price
- AED 2,204.76
- Saving from the scheme
- AED 1,904.76
Results are estimates for general information, not tailored advice.
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.
Legal basis
We review this calculator whenever the FTA or Ministry of Finance issues a new decision or clarification.
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.
VAT registration and returns
Our FTA registered accountants register you, file every return on time and fix errors before the FTA finds them, for a fixed monthly fee.