Business-to-Business Supplies of Healthcare Services
Issue
Depending on the circumstances, a provider of healthcare services may be contractually supplying these services to another provider of healthcare services.
For example, a doctor may have contracted with a hospital to provide certain healthcare services from the hospital’s premises. Alternatively, a hospital may have contracted with a laboratory or another hospital for conducting tests or medical procedures for the hospital’s patients.
The question is whether such business-to-business healthcare services are eligible for zero-rating.
Summary
A supply of healthcare services may only be zero rated if the recipient of the supply is also the person who receives the treatment.
Detailed discussion
VAT treatment of healthcare services:
Most goods and services supplied in the UAE by a taxable person are subject to VAT at 5%.
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. For the purposes of the Article, “healthcare services” are defined as:
“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 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%.
As a consequence, where a supply of services is made by a healthcare provider, the provider has to consider who the recipient of the supply is in order to be able to determine if the supply shall be zero rated.
VATP016 – B2B healthcare services – 24 10 2019 Download the complete