1.We have analysed the impact if VAT on Healthcare Service. Under the Common framework of GCC VAT Agreement, it is stated to make Healthcare sector either Exempt or Zero Rated. Based on this common framework, State of GCC can make Healthcare Sector as Exempt or Zero Rate of Tax.
The Kingdom of Bahrain has opted to make Healthcare Sector Zero Rated under the VAT regime. The advantage to have Goods or Services or Both under zero rated is to claim VAT paid on tax on supplies received by the registered person.
Goods / Services related to preventive and primary healthcare services offered to the patient while on treatment; and supply of specified medicines & medical equipment shall be zero rated.
2.As per Clause 4 & 5 of Article 53 of Bahrain VAT Law Zero Rated Supplies shall apply to, “Supply of preventive and basic healthcare services and related goods and services” and “Supply or import of medicines and medical equipment in coordination with the concerned medical authorities in The Kingdom”
As per Article 69 of the Bahrain VAT Regulations, “Tax shall be imposed at zero rate on Healthcare Services. Such Services must be qualifying medical Services provided by qualified medical professionals or qualified medical institutions pursuant to the laws and legislation in force in the Kingdom.
3.It means that supply of healthcare services by qualified medical professionals and qualified medical institutions shall be zero rated. Apart from the healthcare services, a supply of goods and services associated with a supply of healthcare services provided to a patient during the course of his treatment shall also be zero rated. Now the question will arise, what shall be the meaning of “Qualified Medical Professionals and Qualified Medical Institutions”, “Qualifying Medical Services” and “Associated Goods and Services farming Integral part of Healthcare Services” which shall qualify for Zero Rate of Tax.
4.-Meaning of Qualified Medical Professionals:– It means Persons who are licensed as practitioners by the National Health Regulatory Authority or under any other authorised medical body in the Kingdom. For example:- Medical Practitioners, Midwives, Nurses, Mental Health Specialists, Dentists, Opticians, Radiologists, Pathologists, Paramedics and Pharmacists.
5.-Meaning of Qualified Medical Institutions:– It includes hospitals, physiotherapy centres, medical centres, private clinics, alternative medical centres and clinics for practicing any supporting medical professions licensed by the National Health Regulatory Authority, or under the supervision of the Ministry of Health.
6.List of Qualifying Medical Services which shall qualify for zero rate of tax for Healthcare Sector:
- General medical health Services
- Specialist medical health Services, including surgery
- Dental Services
- Services related to the treatment of mental illnesses
- Occupational or surgical health Services
- Speech therapy
- Physiotherapy provided by a qualified medical professional
- Sight and hearing tests
- Nursing care (including care in a nursing home)
- Services relating to diagnosing an illness, including the analysis of any samples and x-rays
- Vaccinations
- Health testing and screening that is undertaken under a local law, documented policy or contractual obligation
7.List of Integral Goods and Services farming integral part of Healthcare services provided together with qualifying medical services shall qualify for zero rate of tax for Healthcare Sector:
- Drugs, medicines, bandages and other medical consumables administered or used during the course of performing qualifying medical Services,
- Laboratory Services performed by qualified persons,
- Transport Services for patients or those injured,
- Accommodation and catering Services provided by a qualified medical provider to its patients,
- Mortuary Services provided by qualified medical providers,
- Medical consultations provided remotely by means of electronic communications such as telephone or video link.
8.List of Medicines and medical equipment shall Qualify for Zero rate of Tax: Import or supply of medicines and medical equipment as specified by the government authorities (list awaited) is zero rated. We understand that this list will be issued shortly in consultation with the Ministry of Health.
9.List of Standard Rated Goods and Services i.e. VAT shall be applicable at the rate of 5% on below mentioned items:
- A cosmetic procedure unless provided as part of treating a medical condition as determined by a qualified medical professional.
- The Supply of food and beverages to any Person who is not a patient,
- Parking and valet Services,
- Telephone, internet and Electronic Services, including TV rental Services,
- Accommodation provided to any Person who is not a patient.
Based on above analysis, Healthcare Sectors need to bifurcate their goods or services or both and medical equipment based on rate of tax i.e. Zero rate or Standard rate and consider the impact on fees charged to patients.
Most of the goods and services provided by the medical intuitions fall under zero rate of tax, they shall be eligible to claim the refund of Input Tax Recoverable paid for procurement of goods and services on which VAT are levied. This shall reduce the burden of Cost. Therefore, it is advisable to get register for VAT even if it is not mandatory under Law.
Please feel fre to write to us on amlesh@apmh.in / info@apmh.in for any further queries on the above blog.