VAT Implication in the Healthcare Sector in UAE

The United Arab Emirates (UAE) has attracted a lot of foreign investment due to its tax-friendly environment, business-friendly regulations, and other benefits. Moreover, the government has placed special emphasis on the healthcare sector in the National Agenda 2021. This makes the healthcare sector a top choice for entrepreneurs wishing to set up a business in the region. However, navigating the local laws and regulations is crucial for a successful business setup in the UAE.

With the government introducing multiple tax laws, we need to find ways to stay updated. Understanding the tax ecosystem helps you comply with legal laws while ensuring a smooth business journey. This article gives an overview of the implications of value-added tax (VAT) for the healthcare sector in the UAE.

What is VAT?

VAT is an indirect tax whose liability is usually borne by the consumers. Therefore, this tax is also known as consumption tax. The Federal Tax Authority (FTA) regulates the tax system in UAE. The VAT is levied at a standard rate of 5 per cent. However, there are specific scenarios where the VAT rate varies or is fully exempted.

VAT on Healthcare in UAE

VAT in UAE is applied differently to products and services in the healthcare sector. The primary goal is to promote the development of the economy while ensuring essential healthcare remains affordable. The UAE government provides a full exemption for medical services and products that are ancillary in nature. However, VAT is fully applicable to elective and unnecessary healthcare services.

VAT Implication on Medical Services and Products

The VAT is either fully exempted or levied at its standard rate. Let us look at the VAT implications within the healthcare businesses in UAE.

Zero-Rated VAT

• Healthcare services for preventive or necessary medical treatments (e.g., doctor consultations and surgeries) are fully exempted.
• Certain medicines and medical equipment registered with the UAE Ministry of Health and Prevention also qualify for complete exemption.

Standard-Rated VAT (5 per cent):

• Elective treatments like cosmetic surgeries or aesthetic dental work.
• Ancillary services such as admission fees, sick leave certificates, and room upgrades.
• Non-medical products like dietary supplements and cosmetic lenses.

The table below helps us distinguish taxable services from elective or ancillary services and gives a complete overview of the application of VAT on healthcare sector in UAE.

Conditions to Avail of Medical VAT Exemptions

Let us look at certain requirements to qualify for complete healthcare VAT exemption in UAE:

• The recipient and the patient must be the same individual.
• Business-to-business supplies (e.g., between hospitals and labs) are generally taxed at 5 per cent.
• The service must be provided by a healthcare institution, doctor, nurse, or pharmacist licensed by the UAE Ministry of Health or other competent authorities.
• Medications and medical equipment must be registered with the Ministry of Health and Prevention.

Find out more about VAT implementation in the UAE.

Why Commitbiz?

Corporate service provider Commitbiz LLC is an industry expert with over 17 years of experience. We have helped entrepreneurs from across the globe set up their businesses in the UAE and the Middle East. If you are looking to start your business in the healthcare sector in the UAE, our consultants can offer you personalised services to meet your specific needs. Our experts have in-depth knowledge of the market and local regulations. You can reach out to us and learn more about tax consulting in Dubai and VAT on healthcare in UAE.

Contact us to learn more about the services we provide and turn your business dreams into a reality!