Page 70 - Focus Group

VAT and Health Care

Since the VAT was introduced in the UAE, the health • Unique scenarios created with doctors using
care sector always had the least clarity and there other hospitals to perform surgeries.
were limited details available which lead to a lot of
incorrect interpretations. This was resolved once • Visiting doctors performing surgeries in the
the FTA released a clarification; however the grey UAE.
areas continue to remain. We still see a lot of health • Diagnostic clinics as outsourced service
care facilities not addressing this properly and providers to hospitals.
various medical facilities continue to be exposed to
an incorrect interpretation of the VAT law. • Lab Tests and procedures that might not
directly relate to the symptoms and treatment
VAT Regulations of a medical condition

Article 45 (14) of the VAT decree law defined • Elective treatment being considered as
under supplies subject to zero rate: The supply necessary for the wellbeing.
of preventive and basic healthcare Services and
related Goods and Services according to what is The clarification VATP016 did deal with a lot of these
specified in the Executive Regulation of this Decree- B2B questions as they tried to address the fact that
Law a relationship between two service providers does
not fall under “zero rated” as the primary purpose
Article 41 of the ER provided a lot more details of the regulation was to maintain the zero rate
regarding the health care sector. between the service provider and the patient.

Cabinet Decision 56 talked about the medication A couple of practical examples that came up while
and the medical equipment and the need for the carrying out a review and the questions raised as
same to be on the approved list to qualify under we analyzed the arrangement. - A doctor performs
the zero-rated tax rate. a surgery in another hospital:

Even this left a lot of gap as this sector struggled What is the business arrangement between the
to understand the impact of VAT on the various doctor and the hospital?
business models and relationships between the
service providers and the patient. Is the doctor using the medical team and all
the necessary equipment and supplies of the
As a consultant when I tried to navigate the VAT hospital?
waters there were a myriad of complex scenarios
that came up. To list a few common scenarios. Does the doctor have his own team?

70 TAX JOURNAL 2020 The Institute of Chartered Accountants of India (Dubai) Chapter NPIO