The Government of UAE is making all the efforts to make the UAE a preferred health care destination in the world. The government has approved a budget for 2019 in which more than half of the budget is for education and healthcare because of the National Agenda of UAE in 2021. The government has reduced the VAT from most of the health care services. In this article, we will discuss What is VAT on Healthcare Services in UAE.
Before introducing the budget of 2019, the VAT for health care services was 5%. The full form of VAT is Value Added Tax. Though the government charges any VAT for the transactions made by the patients/consumers the VAT is applicable for the businesses. The VAT law of UAE doesn’t charge any taxes for the treatment of the recipient of the supply so the VAT here is zero.
But sometimes it becomes a matter of debate who the recipient is. It can be the actual patient who is undergoing the medical treatment or it can also include a recipient who is contractual. It is controversial that the VAT is zero only when the healthcare service is provided for the treatment of the patient and if the patient is not the recipient and the hospital becomes the recipient then a VAT of 5% is applicable or not. The Federal Tax Authority has issued a clarification that the supply of the healthcare services between businesses will be Taxable at a standard rate of 5%. So, in some cases the VAT is applicable and in some cases, it is not.
Know What is VAT on Healthcare Services in UAE
It is for sure that the VAT applicable for the healthcare of a patient is zero but it needs to be clarified whether VAT for the services between businesses is zero-rated or not. What are the healthcare services where the VAT is zero-rated is also not clear? If the condition of a patient is serious and the patient needs to be in a luxury room for surgery then will the VAT be charged at a rate of five per cent, because a luxury room doesn’t come under the provision of a zero-rated basic health care service. It is still needed to clarify what are the basic healthcare services for which the VAT is zero.
There are services for the patient which are free from VAT and those are the transportation for medical purposes and nursing cares, the catering service for the patient, accommodation for the patient, Residential accommodation etc. The VAT for these services is zero-rated in UAE.
All the goods which are sold in to or within the healthcare sector which are not prescribed or other than medical equipment or medicines are liable to VAT. That means anything which will be sold by the healthcare sector or bought by the healthcare industry will be charged a standard rate of 5% VAT. The government of UAE introduced this facility in the budget because if the all the healthcare-related services are zero-rated then these industries will use this service as a tax-saving tool and they will invest all their money in healthcare sectors to save VAT.