Medical care costs will not increase with VAT

The cost of medical care in the country will not rise this year to cover providers’ added costs when value-added tax is imposed in January, healthcare professionals say. Health care is exempt from VAT but many people are worried that providers will raise their charges this year to recover VAT on utilities, such as phones or electricity. But medical centres and hospitals said families need not worry because the Health Authority Abu Dhabi and Dubai Health Authority monitor all pricing, reporting The National. 

The percentage of increase on a year-on-year basis is regulated, so I cannot just increase my prices by 5 to 7 per cent to absorb VAT costs," said Siraj Master, finance director of Zulekha Hospital in Dubai.

In most countries medical services, along with life-saving drugs, are exempt from goods and services taxes. As VAT cannot be passed on to the patient, hospitals are waiting to see the fine print of the tax law.

On expenses such as electricity, rentals, phone bills or general purchases we will be paying VAT, but we cannot set that off from what I charge my customers, so it is going to add costs in the healthcare industry," said Mr Master.

Providers are also waiting for details on taxes for pharmaceutical products and medicines, including antibiotics.

Some countries have policies that help hospitals and clinics to recover taxes on medical supplies.

If VAT applies to pharmacy supplies, then the cost of all inputs like stents or catheters will be subject to VAT, but I cannot pass on that burden to the customer like any other industry," said Hari Mohan, chief financial officer of VPS Healthcare, which runs hospitals in Abu Dhabi, Dubai and Oman.

"In some economies, since the final service is exempt and I’m paying an additional tax to suppliers, I get a duty drawback from the government. So we are waiting for more information."

eople have expressed relief that fees for doctor’s visits and tests will not rise.

"Some tests are not covered by insurance and it would hurt families if there was an additional tax on this," said Anna Jacobs from the Netherlands.

"Medical services in my country are not taxed and I’m happy it will be the same here."