Cosmetic services subject to 5% VAT in UAE
January 13, 2019
Majority of healthcare services have been classified as zero-rated
Healthcare services that are not basic or preventive in nature but more cosmetic are subject to the standard 5 per cent VAT rate, tax experts said.
The majority of healthcare services under the UAE VAT law have been classified as zero-rated. This effectively means that such services are subject to VAT at zero per cent but with the eligibility to recover the VAT incurred on associated costs.
"The government has a keen interest and focus on promoting the healthcare industry in the UAE. Keeping this intent in mind, the government has kept basic and preventive healthcare supply at a zero rate of VAT. But there are a lot of activities that are still subject to VAT," said Nimish Goel, partner at WTS Dhruva Consultants, while addressing a seminar on VAT.
Research reports suggest healthcare expenditure is projected to reach in excess of $100 billion in the GCC, with the UAE playing a prominent role. It is estimated that the UAE healthcare market is projected to reach Dh71.56 billion by 2020.
Dr Ramadan AlBlooshi, CEO, Dubai Healthcare City Authority - Regulatory (DHCR), said following the introduction of VAT at the beginning of last year, the authority received enquiries about its implementation.
"We are keen to provide a platform to help stakeholders have a better understanding of VAT to facilitate compliance in the free zone," he said.