VAT Implementation on Healthcare Services in the UAE

July 11, 2021Dated:  | |

The Federal Tax Authority (FTA) in UAE mandates VAT (Value Added Tax) implementation on all goods and services in the UAE. The VAT rate could be Standard or Zero or Exempt according to the conditions as per the VAT regulations. Consequently, in the case of healthcare services, the FTA regulates that specified health services that intents to cure a disease are Zero-rated while others that don’t satisfy the criteria as per the regulations are subjected to standard VAT at a 5% rate. The FTA also insists that a supply of healthcare services may only be zero-rated if “the recipient of the supply is also the person who receives the treatment”

The healthcare services in the UAE that are VAT zero-rated include:

  • Preventive healthcare services including vaccination.
  • Healthcare services intended to treat humans (Including medical/dental services).
  • Medicines and equipment that are approved by the Ministry of Health and Prevention and are listed in the Cabinet Decision

The healthcare services in the UAE that are VAT standard-rated include:

  • Services like cosmetic or elective which are not for treatments and are not preventive.
  • Medicines and equipment that are NOT approved by the Ministry of Health of Prevention and are NOT listed in the Cabinet Decision.
  • Other medical supplies.

However, on 1st September 2020, the cabinet issued a decision whereby certain medical supplies were temporarily subjected to zero-rated VAT until 31st December 2021 as per the Cabinet Decision No, 15/3 O of 2021.

Subsequently, the medical supplies that are temporarily subjected to zero-rated as per the FTA VAT guidelines VATP025 are:

  • Medical face masks that are not included in the Cabinet Decision on Medications and Medical Equipment Subject to Tax at Zero Rate (of approved standards 14683 and UAE.S ASTM F2100)
  • Half filtered face mask(UAE.S EN 149)
  • Non-Medical “community” face mask made from textile (UAE.S 1956)
  • Single-use gloves(UAE.S ISO 374-2)
  • Chemical disinfectants and antiseptics intended for use on the human body, but excluding detergents, cosmetics, and personal care products (UAE.S EN 1276, EN 1650, and EN 14476:2013+A2)

The standard 5% is also applicable if there is a contract between a hospital and a diagnostic center where the recipient of the services is not the patient but the hospital. The FTA with regard to this has issued a guideline (VATP016) on  business-to-business supplies of healthcare services explaining different scenarios where VAT has to applied:

  1. A doctor has contracted with a hospital to see a patient who is in the hospital:
  • Standard-rated if the doctor is there to provide service for the hospital.
  • Zero-rated if the service comes under the executive regulations for healthcare services.

 

  1. The hospital refers the patient to a laboratory:
  • Zero-rated as supply is between laboratory and patient.

 

  1. Hospital contacting another hospital:
  • Standard-rated if it is to perform a specialized procedure for the patient whereby the supply is between hospitals.
  • Zero-rated if it is to perform a  procedure for the patient whereby supply is between the hospital and its patient.
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