The General Authority of Zakat and Tax outlines the VAT collection mechanism from private healthcare providers
Riyadh, January 11, 2018:
The General Authority of Zakat and Tax announced the government’s mechanism to bear value added tax on behalf of Saudis who use services provided by private hospitals and medical centers which are registered in VAT system, in accordance with the Royal Decree No. (A / 86) dated 18/4/1439 AH.
The tax to be borne by the government includes the standard rate of 5% on amounts paid for in full in cash by Saudi citizens or the deductible amount agreed with their respective insurance companies. The insurance companies will be responsible for paying VAT on the health services covered by the insurance policy within the agreed coverage limit.
As agreed upon with the Ministry of Health, GAZT noted that private hospitals and medical centers registered in the VAT system will have to issue tax invoices that do not include VAT to Saudi citizens for the amount due in respect of the healthcare services provided to them. They are also responsible for confirming the identity of the recipients of the service prior to issuing the invoice and including their national identity ID card data on the issued tax invoice.
As for the healthcare services provided to non-Saudis, private hospitals and medical centers are required to issue tax invoices that include the standard 5% VAT rate, in accordance with the VAT Law and its regulations.
When it comes time to file their tax returns via the VAT website, GAZT stated that private healthcare providers should list transactions with non-Saudis related to healthcare services subject to the standard 5% rate under the “Local Sales Subject to Basic Rate” section. Services provided to Saudis, on the other hand, should be entered under the "Sales to citizens (private health services / private education / first house)" section.
In accordance with the VAT regulations, GAZT affirmed the right of businesses operating in this sector which are registered in the VAT to deduct their input taxes. The regulations also stipulate that zero-rated medications and medical equipment be listed separately in the tax invoice.
Prior to the introduction of the VAT and in cooperation with the Ministry of Health and the Saudi Food and Drug Authority, GAZT issued the list of medicines and medical equipment which will be taxed at the zero percent rate. These include certain medicines, treatments and medical equipment, as well as medical equipment for people with special needs.
In the coming period, GAZT plans to organize a series of workshops to fully explain how the new mechanisms work. These workshops will be held in cooperation with the Ministry of Health and relevant bodies.
For all VAT-related information, GAZT invites all businesses to visit the VAT website VAT.GOV.SA. For inquiries, they may contact the Call Center hotline (19993) or follow the VAT account @SaudiVAT on social media.