Health is an important sector because people do not really compromise when it comes to health. And in that case the people have to spend a lot of money to treat their health. As there are different charges for everything, for example one needs to pay the consultation fee, fees for medical test, pay for medicines, hospital charge, etc. Although, there is exception, as there are some healthcare service that are free and that means that no tax is charged and there is a charge called input tax and that can be claimed.
Impact of VAT on Health Services in UAE
The VAT is implemented in UAE on the health care sector in UAE from January 2018. And it is said that it will not affect the health care service but it is also said that it will not increase the medical cost. But the premium of health insurance will be increased. And the experts have said the premium will increase by 5%. The UAE Ministry of Finance said that the some services will be exempted from the VAT implementation. The zero rated service like medical service will be out of VAT.
Though there is a confusion regarding that as several analysts are not sure about whether the medical insurance, dental treatment, optical treatment and third party administration fees will be affected. Though it is being said that VAT will be charged for supplies and that might include the medical supplies.
When it comes to some health care services that are basically subjected to VAT; according to the rule VAT will be implemented on traditional and alternate medicines, cosmetic surgery, certain therapy like naturopathy, acupuncture, reflexology, etc. VAT will be implemented on cosmetic products, herbal medicines, health supplements, rental clinics, etc. According to the experts the medical services that are not included in the relevant goods and services are exempted from tax. As the medical insurance does not come under that so the 5% hike will be implemented; and the people who are going to buy insurance will have to pay a hiked premium.
Therefore, the private hospitals in UAE will supply both types of the goods and the supplies on which VAT is implemented those are not claimable. This will affect a little to the common people as the service will not be remain completely zero rated. And, when the clinic has to pay the tax on rent so the entire charge will be increased.