Introduction
Healthcare in the UAE plays a vital role in supporting residents and visitors. Authorities always aim to provide high-quality medical care. The government made most healthcare services subject to zero-rated VAT, while some remain 5% standard-rated.
Healthcare services include preventive treatment, medical support, and necessary consultations. If patients had to pay VAT on every service, the UAE might lose its image as a top healthcare destination. But with correct VAT rules, the sector grows stronger and more trusted.
VAT on Healthcare Services
Many countries exempt healthcare services from VAT. In the UAE, the approach is different. Instead of exemption, services are either zero-rated (0%) or standard-rated (5%). This system allows healthcare businesses to recover input VAT. That means there’s no extra hidden cost for providers.
Zero-Rated (0%) VAT Covers:
- Preventive services like vaccines
- Medical and dental treatments for humans
- Approved medicines and medical equipment under Cabinet decisions
Standard-Rated (5%) VAT Covers:
- Cosmetic services not preventive in nature
- Medicines and equipment not listed in Cabinet decisions
- Additional medical supplies outside zero-rated scope
This distinction ensures patients get essential services without extra burden while luxury or optional services pay the standard rate.
Impact of VAT on Record-Keeping
Introduction of VAT also brings strict rules for record-keeping. Every clinic and hospital must keep records for five years. Missing records may cause penalties.
While it improves discipline, the process is time-consuming. Hospitals also face challenges in deciding whether a service is zero-rated or standard-rated. However, since many services are zero-rated, providers can claim input VAT refunds. This improves business cash flow over time.
Real-Life Scenarios of VAT in Healthcare
A doctor contracts with a hospital. The hospital charges patients zero-rated VAT for consultation. But the doctor’s service charge to the hospital attracts 5% VAT.
- A hospital refers a patient to a laboratory. If the lab deals directly with the patient, it charges zero-rated VAT. But if the lab only serves the hospital under a contract, the service may fall under 5% VAT.
These examples show why correct classification matters. Misunderstanding VAT rules may result in financial errors and penalties.
Business Expenses Under VAT
Healthcare providers often spend money on marketing, utilities, or office furniture. VAT on these purchases is usually recoverable in proportion to taxable supplies. But not all VAT is recovered.
This partial recovery affects overall pricing. Hospitals sometimes raise fees slightly to balance costs. Thus, careful VAT planning helps control final service charges for patients.
Role of Mubarak Al Ketbi (MAK) Auditing in VAT Management
Mubarak Al Ketbi (MAK) Auditing supports businesses in handling VAT rules effectively. Our team provides expert consultancy for healthcare firms across the UAE.
Our VAT Services Include:
- VAT registration and compliance
- VAT return filing and refund claims
- Record-keeping advisory
- Tax planning for healthcare providers
- Risk control during audits
We don’t stop at VAT. Our firm also provides:
- Accounting & bookkeeping
- Internal and external auditing
- Payroll services
- Corporate tax advisory
With skilled experts, Mubarak Al Ketbi (MAK) Auditing ensures every healthcare client follows UAE VAT law correctly.
What Can Help
VAT in healthcare brings both benefits and challenges. It helps the sector recover input VAT, but it also requires strict compliance. Healthcare providers must classify services correctly, maintain records, and manage refunds smartly.
That’s why Mubarak Al Ketbi (MAK) Auditing is the right partner for healthcare businesses. Our expertise makes VAT simple, clear, and effective. After all, “A stitch in time saves nine”—solving VAT issues early prevents bigger problems later.
📍 For more information:
- Visit: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- What Can Help
- VAT in healthcare brings both benefits and challenges. It helps the sector recover input VAT, but it also requires strict compliance. Healthcare providers must classify services correctly, maintain records, and manage refunds smartly.
- That’s why Mubarak Al Ketbi (MAK) Auditing is the right partner for healthcare businesses. Our expertise makes VAT simple, clear, and effective. After all, “A stitch in time saves nine”—solving VAT issues early prevents bigger problems later.
- 📍 For more information:
- Visit: Saraya Avenue Building – Office M-06, Block/A, Al Garhoud – Dubai – United Arab Emirates
- Contact/WhatsApp: +971 50 276 2132
