Is healthcare subject to VAT in the UAE?

Article 41 – Zero-rating Healthcare Services 25 1. The phrase “Healthcare Services” means any Service supplied that is generally accepted in the medical profession as being necessary for the treatment of the Recipient of the supply, including preventive treatment. 2. A supply of healthcare services shall be zero rated on the condition that the supply shall: a. Be made by a healthcare body or institution, doctor, nurse, technician, dentist, or pharmacy, licensed by the Ministry of Health and Prevention or by any other competent authority concerned with healthcare. b. Relate to the wellbeing of a human being. 3. "Healthcare services" do not include any of the following: a. Any part of a supply that relates to staying in or attending an establishment the principal purpose of which is to provide holiday accommodation or entertainment such that any Healthcare Service is incidental to the provision of the accommodation or entertainment. b. Elective treatment for cosmetic reasons other than prescribed by a doctor or medical professional for treating or prevention of a medical condition. 4. A supply of Goods or an Import of Concerned Goods is zero-rated if it is a supply or an Import of:26 a. Any medical product as specified in a decision issued by the Cabinet. b. Any other Goods not covered by paragraph (a) of this Clause which are supplied in the course of supplying a Person with zero-rated Healthcare Services that are necessary for the supply of such Healthcare Services. Title Seven – Exempt Supplies

Article 45 - Goods and Services Subject to Zero Rate18 The zero rate shall apply to the following Goods and Services: 1. A direct or indirect Export of Goods and Services to outside the Implementing States as specified in the Executive Regulation of this Decree-Law. 2. International transport of passengers and Goods which starts or ends in the State or passes through its territory, including Transport-related Services. 3. Air passenger transport in the State if it is considered an “international carriage” pursuant to Article 1 of the Warsaw Convention for the Unification of Certain Rules Relating to International Carriage by Air 1929. 4. Supply or Import of air, sea and land means of transport for the transportation of passengers and Goods as per the criteria and conditions specified in the Executive 18 Article amended as per Federal Decree-Law No. 18 of 2022. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 21 Regulation of this Decree-Law. 5. Supply of Goods or Services, or Import of Concerned Goods, related to the supply of the means of transport mentioned in Clause 4 of this Article and which are designated for the operation, repair, maintenance or conversion of these means of transport. 6. Supply or Import of air or sea rescue and assistance aircrafts or vessels. 7. Supply of Goods and Services related to the transport of Goods or passengers aboard air, sea and land means of transport pursuant to the provisions of Clauses 2 and 3 of this Article, designated for consumption on board; or anything consumed by any means of transport, any installations or addition thereto or any other use during transportation. 8. The supply or Import of investment precious metals. The Executive Regulation of this Decree-Law shall specify the precious metals and the standards based on which they are classified as being for investment purposes. 9. The first supply of residential buildings within 3 years of its completion, either through sale or lease in whole or in part, according to the controls specified in the Executive Regulation of this Decree-Law. 10. The first supply of buildings specifically designed to be used by Charities through sale or lease according to the controls specified in the Executive Regulation of this Decree-Law. 11. The first supply of buildings converted from non-residential to residential through sale or lease according to the conditions specified in the Executive Regulation of this Decree-Law. 12. The supply or Import of crude oil and natural gas. 13. The supply of educational Services and related Goods and Services for nurseries, preschool, school education, and higher educational institutions owned or funded by Federal or local Government, as specified in the Executive Regulation of this Decree-Law. 14. The supply of preventive and basic healthcare Services and related Goods and Services, and Import of related Concerned Goods according to what is specified in the Executive Regulation of this Decree-Law. Federal Decree-Law No. 8 of 2017 and its amendments – As published by the Ministry of Finance 22 Chapter Two – Exemptions

Most goods and services supplied in the UAE by a تخضع معظم السلع والخدمات التي يت ّم توريدها داخل الدولة .%5 لضريبة القيمة المضافة بالنسبة األساسية taxable person are subject to VAT at 5%. In accordance with Article 41 of Cabinet Decision ) لسنة52( ) من قرار مجلس الوزراء رقم41( ووفقا للمادة No. 52 of 2017 on the Executive Regulations of the في شأن الالئحة التنفيذية للمرسوم بقانون اتحادي2017 Federal Decree-Law No 8 of 2017 on Value Added في شأن ضريبة القيمة المضافة2017 ) لسنة8( رقم Tax (“Executive Regulations”), healthcare services تُطبق نسبة الصفر على خدمات،)"("الالئحة التنفيذية may be zero-rated if certain conditions are met. .الرعاية الصحية بناء على استيفاء التوريد شروطا محددة For the purposes of the Article, “healthcare ولغايات هذه المادة تُعرّ ف "خدمات الرعاية الصحية" على services” are defined as: :أنها “any Service supplied that is generally accepted "أي خدمة يتم توريدها وتكون متعارفا عليها بشكل عام in the medical profession as being necessary for ضمن مهنة الطب على أنها ضرورية لعالج متلقي the treatment of the Recipient of the supply ." بما في ذلك العالج الوقائي،التوريد including preventive treatment.” The above definition makes it clear that the يجب أن يكون متلقي التوريد هو،وكما هو موضح أعاله recipient of the supply must also be the patient ففي حال لم يكن المريض متلقي.ذاته المريض متلقي العالج that receives the treatment. Where the patient يكون من الواجب تطبيق،العالج هو ذاته متلقي التوريد and the recipient of the supply are not the same ضريبة القيمة المضافة على خدمات الرعاية الصحية بنسبة person, the services should therefore be subject to .%5 VAT at 5%. As a consequence, where a supply of services is في حال كانت الخدمات مقدمة من قبل مزود،ونتيجة لذلك made by a healthcare provider, the provider has to فيجب عليه النظر في من سيتلقى،خدمات رعاية صحية consider who the recipient of the supply is in order التوريد لتحديد ما إذا كان التوريد خاضعا لنسبة الصفر أم to be able to determine if the supply shall be zero- .ال rated. In determining the identity of the recipient of the يجب البدء بالنظر في،وألغراض تحديد هوية متلقي التوريد supply, the starting point should be to consider the تحديد الطرف الذي، السيما،الوضع التعاقدي بين األطراف contractual position between the parties and, ، وبالتالي.يحق له استالم الخدمات المورّ دة بموجب العقد specifically, who is contractually entitled to the وعلى الرغم من أن االتفاقيات التعاقدية بين األطراف ليست services supplied. Thus, although the contractual لكن ينبغي النظر إليها،دائما فاصلة في تحديد اتجاه التوريد 2

5.3. Fines and penalties An educational institution may charge fines and penalties, for example on late payment of tuition fees or on damage to property. Fines and penalties imposed for contravening the terms of an agreement or performing an unlawful act are, generally, not Consideration for a supply, and are outside the scope of VAT. In contrast, payments will be subject to VAT at the Standard Rate where they relate to an administrative Service, even if they are referred to as a fine or penalty. The VAT treatment should be assessed by reference to the specific facts. Further information can be obtained from VAT Public Clarification - Treatment of Compensation-Type Payments (VATP001). 5.4. Healthcare Services Clinics or medical facilities may be made available on-site by educational institutions for the benefit of students. The VAT treatment will depend on the specific facts. Some common scenarios under which educational institutions are involved with medical Services or suppliers, are set out below. 5.4.1. Educational institution operating a clinic Where an educational institution operates its own clinics, it should consider whether it is making a supply of healthcare Services which qualifies for zero-rating. A supply of healthcare Services generally accepted in the medical profession as necessary for the treatment of the recipient can qualify for zero-rating where the supply is:20 • • • made by a healthcare body or institution licensed by the Ministry of Health and Prevention or by any other competent authority. This means that the educational institution’s clinic should hold the relevant licence, provided by a practitioner such as a doctor or nurse who is licensed by the Ministry of Health and Prevention or by any other competent authority, and related to the wellbeing of a human being. Charges to cover the expenses of maintaining a clinic and having medical staff and opening and maintaining medical records of patients do not qualify as healthcare services and are, therefore, subject to 5% VAT if charged by an educational institution that is a Taxable Person. 20 Article 41(1) of the VAT Executive Regulation. VAT Guide | Education | VATGED1 16