National Bureau for Revenue (NBR) has recently issued VAT guidance note for the health care sector which sets out summary of the VAT Rules and procedures in relation to the healthcare sector in the Kingdom of Bahrain.
We have highlighted below the key clarifications provided in the guidance note:
Health care services
- Healthcare services include all preventative and basic medical services a patient receives in hospitals, health centers, medical clinics and other medical facilities, but exclude services provided by these bodies which are of a commercial or investment nature.
Qualifying medical services
- The provision of healthcare services by government hospitals and medical institutions are outside the scope of VAT when they are provided free of charge.
- The provision of healthcare services by private hospitals and government hospitals( when consideration is received from the patients) would be zero rated. Inclusions in the qualifying medical services for Zero Rating:
- Any charges for administrative services by a healthcare provider when the administrative services are provided in the context of qualifying health care services such as registration of a new patient, issuing a duplicate invoice or sickness certificate.
- Drugs, medicines, bandages and other medical consumables administered or used while performing qualifying medical services
- Goods and equipment used as part of the qualifying medical services (e.g., prostheses replacement, implants, metal screws, pins, rods, plates, braces, etc.)
- 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, and
- Medical consultations provided remotely by means of electronic communications such as telephone or video link.
Exclusions to health care services for Zero rating:
- A cosmetic procedure shall not be considered as a qualifying medical service unless provided as part of treating a medical condition as determined by a qualified medical professional.
- Any charges for administrative services by a healthcare provider when the administrative services are provided in the context of Non qualifying health care services
- 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
Import of goods with special needs – Article 85 of the Executive Regulations
Applicable for goods on which customs exemption applicable to goods to be used by persons with special needs
The conditions in customs law are as below:
- Importer must be a government entity concerned with people with special needs, or
- Foundation / society licensed with the competent government entity to take care of people with special needs, or
- A GCC national holding “people with special needs cards”, based on the type of disability
The goods must be directly imported by the importer who qualifies the above mentioned conditions
The individuals benefiting from the customs exemption may not dispose the imported motor vehicles prior to the expiry of three years from the date imported
The following documents must be attached to the customs declaration:
- Exemption letter from the competent government body in any of the GCC States
- Original invoice
- Certificate of Origin
- Renting of hospital space with equipment to a medical professionals by a health care institution to enable the professional to provide private health care services are taxable at the standard rate of 5%.
- The VAT charged by the healthcare provider on the services supplied to the patient cannot be recovered by the insurance company.
- Medical assessments and reports may be requested by insurance companies for a broad range of insurance purposes are taxable at the standard rate of 5%.
- Zero-rating provisions will apply for qualifying medical services provided upon request of an insurance company on the basis that the insurance company has procured such services as a result of a legal, contractual or existing policy that it has in place. (Example: Health screening services for its policy holders)
- Zero-rating provisions will apply for qualifying healthcare services provided to an employer on the basis that the employer has procured such services as a result of a legal, contractual or existing policy that it has in place (Example: Health screening for Visa purpose)
- Standard rate of 5% will be applicable on fixed amount paid by employer to third party for make available healthcare facilities / personnel (including medicines and medical equipment) for employees at their place of work.
For any assistance with regards to VAT, please contact firstname.lastname@example.org
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Tax Advisory (VAT)
Grant Thornton Abdulaal
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