VAT on the Healthcare Sector in the Kingdom of Bahrain

The VAT on Healthcare Sector in the Kingdom of Bahrain

Value Added Tax (VAT) has been introduced in Bahrain from 1 January 2019, the National Bureau for Revenue (NBR) has also published a VAT on Healthcare Guide for a business who are dealing with healthcare products to comply with the guide on VAT on Healthcare Sector. Also to let you know, the supply of preventive, basic healthcare services and associated goods and services is zero-rated in Bahrain.

What is Health Care Services?

All the preventive and basic medical services that a person receives in hospitals, health centers, medical clinics and other medical facilities, constitutes health care services.

What is the Rate of VAT on Healthcare Sector in Bahrain?

All the qualifying medical services and the associated goods and services provided in the course of treatment to a patient by a qualified medical professional or a qualified medical institution are Zero-rated in Bahrain.

What is a qualified medical service?

Qualified medical service includes the following:

1. General medical health Services.
2. Specialist medical health Services, including surgery.
3. Dental Services.
4. Services related to the treatment of mental illnesses.
5. Occupational or surgical health Services.
6. Speech therapy.
7. Physiotherapy provided by a qualified medical professional.
8. Sight and hearing tests.
9. Nursing care (including care in a nursing home).
10. Services relating to diagnosing an illness, including the analysis of any samples and x-rays.
11. Health testing and screening that is undertaken under local law, documented policy or contractual obligation.

Who is a qualified medical professional or qualified medical institution?

The qualified medical institution would include the following:

1. Hospitals
2. physiotherapy centers
3. medical centers
4. private clinics
5. alternative medical centers and clinics for practicing any supporting medical professions etc.,

The above should be licensed by the National Health Regulatory Authority, or under the supervision of the Ministry of Health.

Qualified medical professionals include the persons who are licensed as medical practitioners by the National Health care regulatory authority. It also includes the following:

1. Medical practitioners.
2. Midwives.
3. Nurses.
4. Mental health specialists.
5. Dentists.
6. Opticians.
7. Radiologists.
8. Pathologists.
9. Paramedics.
10. Pharmacists. Etc.,

Are all healthcare-related service Zero-rated?

The following are the exception to the Zero-rated Service:

1. Generally, cosmetic surgeries performed are Standard rated in Bahrain. But if such surgeries are performed as part of treating a medical condition as determined by a qualifying medical professional, then such surgery would be taxed at zero rates.
2. The supply of food and beverages to any person who is not a patient
3. Parking and valet services
4. Telephone, internet and electronic services, including TV rental services
5. Accommodation provided to any person who is not a patient

What is the VAT rate for treatment in Government health service?

The healthcare services provided by the government as free of cost are outside the Scope of Bahrain VAT law and when they are charging then we need to consider it on a case to case basis.

What is the VAT treatment for the goods and services associated with Health care services?

The goods and services provided to the patient that are associated with the Health care services the patient is undergoing are Zero-rated in Bahrain.

For example – Medicines, Bandages, Transport service provided to the patient, etc.,

What is VAT rate, if the cost of the health care services is paid by a third party such as the insurance company?

Even if the health care services provided for the patient is paid by the Insurance company or any other third party, the service is still provided directly to the patient. Therefore the bill is issued in the name of the patient even if it is directly paid by a third party.

Please note that the VAT paid on such insurance service cannot be recovered by the insurance company or the third party who pays for the health care services.

What is the rate of VAT on services made to Insurance companies or employers of the patients?

The insurance companies or employers of the patients may request the medical institution for reports like the medical assessment report for processing the claim issued by a patient. These services are directly made to the insurance companies and are therefore the exact nature of the arrangements that need to be determined to conclude the tax implication of such service.

VAT on medicines, Medical devices and Health Products

What is the VAT treatment of medicines and medical equipment?

As per Article 71 of Executive Regulation the local supply and import of medicines and medical equipment that are listed in a decision issued by competent medical authority(National Health care Regulatory Authority) in the Kingdom of Bahrain are taxable at zero rates.

What is the VAT treatment on medicines, medical devices and health products that are not provided by the qualified medical institutions or medical professionals?

The local supply and import of medicines, medical devices, and health products which is included in the list of National Health care Regulatory Authority is Zero-rated in Bahrain. The zero rates apply throughout the supply chain in Bahrain.

For example, the toothbrush, Mouth wash, Tiger balm, Vicks Vaporub etc., that are sold in the retail stores are Zero-rated as these are included in the list provided by the National Health care Regulatory Authority.

Which are the lists of medicines and medical equipment by the National Health Regulatory Authority?

The lists of medicines and medical equipment by the National Health Regulatory Authority can

be found on their website, using the following website. You will learn more from this official site that how VAT on Healthcare sector is applicable under Bahrain VAT Law

Is equipment imported for people with Special needs taxable in Bahrain?

The equipment imported for persons with special needs or those which are used by charity organizations or hospitals for the same purpose are exempt from VAT provided the conditions stipulated by the Customs Law are met. That is, if the goods qualify for customs exception for special needs, then it will also be exempted from VAT while importing.

Emirates Chartered Accountants Bahrain offers an exclusive range of VAT Services in the Kingdom of Bahrain. The Tax Department has practical experience of implementing VAT in Bahrain & VAT in UAE and are professionally well versed with the Bahrain VAT laws and its compliances.

Services we provided in Bahrain:

• VAT Registration
• VAT Training 
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