In accordance with Article 41 of Cabinet Decision No. 52 of 2017 on the Executive Regulations of the Federal Decree-Law No 8 of 2017 on Value Added Tax (“Executive Regulations”), healthcare services may be zero-rated if certain conditions are met.
Healthcare services- Any Service supplied that is generally accepted in the medical profession as being necessary for the treatment of the Recipient of the supply including preventive treatment.
The supply of healthcare services between business to business is taxable at standard rate.
The above definition makes it clear that the recipient of the supply must also be the patient that receives the treatment. Where the patient and the recipient of the supply are not the same person, the services should therefore be subject to VAT at 5%.
Zero – Rated supply – Services such as:
- Preventive treatment and healthcare services provided by private/ government hospitals, physician, nurse, dentist, or a licensed practitioner by the Ministry of Health and Prevention or any other competent authorities and
- Medications registered or approved by the Ministry of Health and Prevention.
- Medical equipment registered or approved by the Ministry of Health and Prevention are subjected to 0% VAT.
Goods or services on which vat is applicable on standard rate
The following goods and services are subject to a standard VAT rate of 5% in the healthcare sector:
a) Healthcare services like cosmetic surgery, therapy (Chinese medicine, acupuncture, and reflexology) that are not for treatment or prevention.
b) Medication and medical equipment that is not approved by the Ministry of Health and Prevention. For example, laser equipment for cosmetic purposes, message machines, etc.
There are some scenarios which clarify about which transaction should be treated as zero rated or standard rates:
| Sr. No. | Scenario | Supply | VAT |
| 1 | A doctor has contracted with a hospital to see patients who visit the hospital | Supply by doctor to the hospital Supply by hospital to the patient | Standard Rated Zero-rated |
| 2 | A hospital refers a patient to a laboratory for a medical test. The patient enters into a separate agreement with the laboratory for the supply of the medical test. | Supply by Medical laboratory to the patient | Zero-rated |
| 3 | A hospital is required to perform a specialized procedure for its patient. The hospital contracts with another hospital to perform the procedure. | Supply by hospital to hospital Supply by hospital to patient | Standard rated Zero-rated |
