Under UAE VAT Law, VAT on healthcare falls into two categories: zero-rated and standard-rated (5%). Healthcare services are zero-rated, i.e., 0% VAT, but the suppliers can recover input VAT on the cost incurred to provide such services. This assists the healthcare practitioners recover VAT paid on medical equipment, drugs, and cost of treatment without increasing the burden on the patient in terms of expenses. However, treatment such as cosmetic surgery is subject to the standard VAT rate.
Which Healthcare Services are Zero-Rated?
The following healthcare services are zero-rated under UAE VAT law:
- Preventive healthcare services such as vaccinations and medical check-ups.
- Treatment of illness or injury, including surgeries, consultations, and follow-ups provided by licensed professionals.
- Medical care provided by licensed medical professionals, including doctors, nurses, pharmacists, and therapists.
- Medical equipment and consumables, if used for medical purposes and prescribed by a licensed medical professional.
To be eligible for zero-rating, the service must be rendered by an approved healthcare facility or professional registered with the Ministry of Health and Prevention or the relevant regulating authority.
Which Healthcare Services are Standard-Rated?
There are a number of healthcare services that fall outside the zero-rated service provision and are taxed at the normal rate of 5% VAT. They are:
- Treatments deemed to be non-medically necessary cosmetic procedures.
- Alternative and wellness therapies such as acupuncture, yoga therapy, or cosmetic treatments that are not registered with authorized medical institutions.
- Vitamins, supplements, and nutritional’s over-the-counter but not by a doctor’s prescription.
- Reports and medical certificates prepared for reasons not medical in nature (e.g., immigration, employment, or insurance).
Also Read: VAT on UAE Hospitality Sector
VAT Compliance for Healthcare Service Providers
Healthcare providers must be registered for VAT where taxable supplies of theirs exceed AED 375,000 annually. Irrespective of most services being zero-rated, registration will allow VAT recovery of business costs. On registration, providers must:
- Issue proper VAT treatment (0% or 5%) tax invoices as the case would be.
- File VAT returns on a periodical basis on the FTA portal.
- Maintain books of accounts of services rendered, purchases incurred, and VAT received/payments.
- Double accounting in the case of zero-rated supplies and normal-rated supplies to compute proper input VAT recovery.
Expert professional VAT registration services such as VAT auditing or tax advisory consultations are highly recommended in the healthcare sector to ensure full compliance with FTA regulations and requirements.
Seek the Expert Services of Top VAT Consultants in UAE
It is essential for consumers, service providers, and institutions to have a clear understanding of how VAT is applied within the healthcare sector in the UAE. Proper classification, accurate billing, and effective compliance with FTA’s regulations and requirements is essential to ensure full VAT compliance. To effectively determine VAT taxability and meet VAT compliance, it is advisable to seek the expert services of premier VAT Consultants in UAE such as VAT Registration UAE. Contact us today and we shall be glad to assist you.
FAQs: VAT on Healthcare Services in UAE
1. In what way are exempt and zero-rated VAT distinguished in education and healthcare services?
Zero-rated supplies are subjected to 0% VAT in order to allow suppliers to claim input VAT against matching expenditure as an attempt to incur a cheaper cost. Exempted supplies are not subjected to VAT, but the suppliers cannot claim input VAT, hence may increase the cost of supply. Zero-rated supplies are minimum healthcare and recognized education supplies, while discretionary or non-essential supplies might be standard-rated or exempted based on nature and type of supplier.
2. Are VATs levied by all UAE schools and universities on school and university charges?
No. Charges for recognized course curricula courses by accredited institutions by fee-charging institutions are exempted. The ancillary activities such as extracurricular activities, canteen facilities, and private tuition, however, can be standard-rated at 5%
3. Is VAT recoverable on healthcare providers’ business expenses?
Yes. Registered health practitioners supplying mainly zero-rated services and registered for VAT can claim input VAT on qualifying expenses such as equipment, medical supplies, and utilities used to supply services.
4. Is a training school taxable?
Depends. Vocational and professional training schools approved by the Ministry of Education usually charge normal-rated VAT. Training, however, under approved courses by approved schools can be zero-rated.
5. Do parents pay VAT on school excursions or school textbooks?
Supposing the trips and materials directly relate to the accepted curriculum and are sanctioned by the school, then they will be zero-rated. Voluntary third-party vendor goods or services may be taxed at 5% VAT.
Also Read: VAT Compliance for Businesses in UAE
