Does VAT sit on top of my menu price or inside it?

On the guest's side it is inside the displayed price; on your side it is on top of everything you keep. The UAE levies VAT at 5% at the point of sale, and you collect it on the government's behalf — it is never revenue. So build the net price from recipe cost first, add the 5% to reach the menu price, and read every cost percentage against the net figure. Rounding a VAT-inclusive price down to a tidy number takes the rounding straight out of contribution.

From Cost-Optimised Pricing Makes Restaurants. Reckless Pricing Quietly Unmakes Them. — the full reading, with the method behind this answer.