GST ON HEALTHCARE SERVICES - 302 Found · 2014-11-14 · 11 CANADA UK AUSTRALIA SINGAPORE/ NEW...

PEJABAT PELAKSANAAN GST

KEMENTERIAN KEWANGAN

SUPPIAH A/L AYAHOO

SENIOR ASSSITANT DIRECTOR

OF CUSTOMS II

GST DIVISION

Date: 5 NOVEMBER 2014

GST ON HEALTHCARE SERVICES

2

Agenda:

Introduction

Mechanism of GST

Exempt healthcare services

Standard rated services by healthcare facility

Other services related to healthcare facility

Types of supply and acquisition by healthcare facility

Apportionment Rules

Other Services

3

Current Treatment

Sales Tax 1972 & Service Tax 1975

GST Treatment on Healthcare Services

ITEM GOVERNMENT PRIVATE

Acquisition

Goods Not subject to sales taxOnly selected goods are not

subject to sales tax

Services Subject to services tax Subject to services tax

Services providedNot subject to services

tax

Subject to services tax on

food and lodging provided

by the hospital

Service

ProviderPatient

Govt collects tax

when service is

provided to

consumer

How service tax works

4

Introduction

5

Sales Tax

&

Service Tax

(SST)

Once GST implement 1st April 2015, Sales Tax Act And Service Tax Act will be repealed.

Goods and Services

Tax (GST) Rate = 6 %

Threshold = RM500,000


6

TYPES OF

SUPPLY

OUTPUT TAX INPUT TAX

Standard rated 6% Claimable

Zero rated 0% Claimable

ExemptNo GST charged

Non claimable

Basic principles of GST

GST charged on

taxable supplies

GST paid on business

purchases

Refund to

taxable person

Pay GST to

Government

Net GST

Output

Tax

Input Tax

Less

EqualsPlus (+)Minus (-)

Criteria to claim Input Tax

7

Basic principles of GST

8

Facility GST Treatment

Government Out of scope

Private Exempt

Supply by Healthcare Services


99

Hospital

SupplierPrivate

Hospital

Patient

HOW GST WORKS - EXEMPT

GST

6 %

NO

GST


Supplier

claims tax

paid on input

Private

hospital

cannot claim

tax paid on

input

Patient

does not

pay any

GST

10

HOW GST WORKS? - EXEMPT

Selling price : RM131

GST : RM0

Total selling price :RM131.00

Purchase cost : RM100

GST* : RM6

Purchase price : RM106

Delivery /

supply chain

*Note: cannot claim input tax

Value-Adding

Activity

Added Value : RM25

Hospital

Supplier

Private

Hospital

Patient


11

CANADA UK AUSTRALIA

SINGAPORE/

NEW ZEALAND/

SOUTH AFRICAINDONESIA

GST / VAT 5 20 10 7 / 15 / 14 10

Healthcare

servicesExempted

- input tax recovery, the

rebate rate is fixed at

83%

- hospital beds on a zero

rated

a) provided by a qualifying institution e.g. Drugs, medicines,

bandages, plasters or ointments in the course of care or

treatment are exempt

b) not a qualifying institution, drugs or medicines that you

supply standard rated

c) HMRC allow pharmacists (including those operating from

an independent pharmacy within hospital premises) to

zero rate drugs, medicines and other qualifying goods

where ALL of the conditions are met

Zero rated

-full recovery of input tax

supply except cosmetic

surgery or procedures

which not to alleviate a

medical condition

Standard rated Exempted

Medicine SR SR SR SR SR

Dietary

supplementsSR SR SR SR SR

TCM SR SR SR SR Exempted

Comparison with other country


12

Healthcare and Related Services :

• Private Hospitals - Exempt

• Private Clinics - Exempt

• Pharmacy – Standard rate

• Veterinary – Standard rate

• Traditional and complementary medical

services (T/CM) – Standard rate

GOVERNMENT – out of scope


13

Exempt

Healthcare Services

14

Healthcare services are treated as

exempt supplies under GST if they are

supplied by the private healthcare facility

registered or licensed premise under the

Private Healthcare Facilities and Services

Act 1998. [Act 586].


15

3 main aspect :

Healthcare services

Include ambulance

food, lodging and mortuary services

Professional healthcare services

Facility healthcare services


16

Healthcare services

medical, dental, nursing, midwifery, allied health, pharmacy

and ambulance services

accommodation for purpose of providing healthcare services

screening, diagnosis or treatment of person

preventive or promoting health

Services provided by healthcare para professional

curing or alleviating any abnormal condition

Include food and mortuary services


17

Healthcare facility

Any premise used or intended to be used for the provision

of healthcare services or health related services, such as

private hospital, hospice, ambulatory care centre, nursing

home, maternity home, psychiatric hospital, psychiatric

nursing home, community mental health centre,

hemodialysis centre, medical clinic, dental clinic or such

other healthcare or health related premises as the Minister

of health may from time to time, by notification in the

Gazette


18

Healthcare professional

any medical practitioner, dental practitioner, pharmacist,

clinical psychologist, nurse, midwife, medical assistant,

physiotherapist, occupational therapist and other allied

healthcare professional and any other person involved in the

giving of medical, health, dental, pharmaceutical services

under the jurisdiction of the Ministry of Health

must be a person who is registered as such under the

regulatory body of relevant professional, dental, nursing or

midwifery profession of medicine or any other regulatory

body and who holds a valid practicing certificate


19

Healthcare services

For the purpose of this treatment, services of the

healthcare professional which are not under the

employment of the private healthcare facilities

shall be treated as outsourcing services and will

be subject to GST.


20


Individual +

Company

Contract for services

70% = RM 7,000.00 (Consultancy Fee)

EX

30% = RM 3,000.00 (Rental, Billing, Nursing, Marketing)

SR

SR

SR

SR

EX

SR

SR

EX

D2

Company +

Clinic

P1 RM 10,000.00

P2

P3

SR

SR

Individual (locum)

H D1

Own

Clinic

EX

EX

F / H

F / H

F / H

EX H – HOSPITAL D – DOCTOR F/H – FACTORY / HOUSE

PROFESSIONAL SERVICES

21

Healthcare services exempt if

Provided by licensed private healthcare facility

eg. : All healthcare services provided in Hospital A

provided by licensed private healthcare facility to

another licensed private healthcare facility

eg. : - mortuary services from Hospital A to Hospital B

- supply of blood test/ x-ray services by Hospital X

to Ahmad Clinic


22


provided by doctor of the licensed private healthcare

facility to a person at home

eg. : Dr Ahmad from Clinic A make a house call to his

patient’s home due to his disability to move


23


provided by provider in licensed private healthcare

facility acting as panel clinic to a company

eg. : Siva Clinic acts as a panel clinic for Syarikat

Maju Jaya and provides healthcare services to

Syarikat Maju Jaya’s staff at Syarikat Maju

Jaya’s premise.


24

Ancillary Healthcare services exempted includes:

Prescription of medicine, food, lodging and

mortuary services by a licensed private

healthcare facility

medical reports


25

• Examination

• Imaging

• Consultancy service

• Medicine

• Accommodation / Room

• Food

• Ambulance

Exempt /

Not subject to GST

Input tax not

claimable

Exempt Services by Healthcare Facility


26

Standard Rated Services

By Healthcare

Facility

27

Standard Rated Supplies

Healthcare services provided by healthcare

professionals in a private healthcare facility who are

not employees nor under its payroll on basis of

contract for service are standard rated supplies.

Any services provided by the healthcare

professionals to the private healthcare facility is

subject to GST at a standard rate.


28

Services not related to healthcare are standard rated :

Provision or rental / lease of space, equipment and other

facilities

Eg. : - Hospital provides operation theatre, medical equipment

to doctor not under its employment

- Rents out part of building used for office, clinic, shop by

third party

Parking, laundry

Accommodation / room and food provided to other than

patient


29

Services not related to healthcare are standard rated : (cont..)

Provision of goods used as aids such as.

eg : Hospital sells artificial limb, crutches, hearing aid, wheelchair

to patient

Provision of staff and professional expertise

Provision of seminar and expertise for training

Provision of facilities for fitness and well being

eg : gymnasium, spa, slimming center


30

Provide facilities and

equipment

Rental

Seminar

Training

Parking

Laundry

Canteen

Hygienic cleaning

Subject to GST -

Standard rated supply

Can claim input tax on inputs relating to such supplies

Other Services by Healthcare Facility


31

Other Services

Related to Healthcare

Services

32

• Spectacle shop

• Test lab

• Veterinary services

• Alternative medicines

(T/CM)


Subject to GST

Input tax claimable

Other Related Activities to Health Sector


33

Other Related Activities to Health Sector( cont..)

• Gymnasium

• Spa

• Sauna

• Slimming centre

• Massage parlor

• Beauty saloon


Subject to GST

Input tax claimable


34

Types of

Supply and Acquisition

by

Healthcare Facility

35

• Exempt supply Supply by private healthcare services :-

Example of exempt supplies

Treatment and consultancy services

Supply of food, accommodation and prescript medicine

Ambulance services

The total charge is GST exempt

Even your annual exempt supply exceed RM500,000

you are still not liable to register under GST


36

• Standard rated supply Supply by private healthcare services :-

Example of standard rated supplies

Provision of space, facilities and equipment

Supply of food, accommodation to other than patient

Parking, laundry services

The charge are subject to GST

If your annual taxable supply exceed RM500,000,

you are liable to register under GST


37

• Mixed supply Supply by private healthcare services :-

Example of mixed supplies

Provision of healthcare services to patient

Provision of food and accommodation to other than patient

Parking, laundry services

Some charges taxable supplies, some are exempt supplies

Need to list out and do apportion


38

• Acquisition of goods and services

Any acquisition of goods or services by healthcare facility

For making taxable supply - can claim

For making exempt supply – cannot claim

For making exempt and taxable supply - apportion


39

Acquisition by Healthcare Facility

Acquisition GST Treatment

Equipment Standard rated

Medicine Standard rated

Services Standard rated


Equipment : certain machinery for healthcare treatment may entitled for GST (Relief) Order 2014

Medicine : certain medicine for healthcare treatment may entitled for GST (Zero Rate Supply) Order 2014

40

Outsourcing Services to Healthcare Facility

• Laboratory

• Hygienic cleaning

• Imaging

• ** Maintenance

• ** Food preparing

• **Security services

• *** Parking

• *** Laundry

Subject to GST

Input tax not claimable if such services usedfor exempt

**Apportion if such services used for mixed

supply

***Claim in full if used for taxable supply


41

Apportionment Rules

Claim

100% input

tax

Inputs

used

Attributable to

both taxable and

exempt supplies

Wholly attributable to

taxable supplies

Wholly attributable to

exempt supplies

Apportionment

rules apply

Cannot

claim input

tax

Apportionment Rules

39

43

• Input tax directly attributable to taxable supply

can be claimed in full

• Input tax directly attributable to exempt supply

cannot be claimed

• Input tax attributable to both taxable and exempt

supply (residual input) need to be apportioned

Std method - Known as TURNOVER METHOD

ITC = R x GST incurred on residual input

R (recoverable %) =Taxable Supplies

Taxable Supplies + Exempt Supplies

x 100

Apportionment Rules

44

Attribution/Apportionment• E.g.

Taxable supplies = RM 250,000

Input tax attributable to taxable supplies = RM30,000

Exempt supplies = RM 50,000

Input tax attributable to exempt supplies = RM6,000

Residual input tax = RM 15,000

R (recoverable %) =250,000

250,000 + 50,000

x 100

= 83.33%

Claimable ITC on residual = 83.33% x 15,000 = RM12, 499.50

Therefore, total claimable ITC = RM30,000 + RM12,499.50

= RM 42,499.50

Apportionment Rules

45

Other

Related Services

46

Pharmacy Services

Type GST Treatment

Industrial Pharmacy Standard rate

Hospital PharmacyGovernment – GST out of scope

Private – exempt

Retail Pharmacy Standard rate


47

Veterinary Services

• Veterinary hospitals

• Clinics

• Veterinary pharmacy

• Animal hotels

• Other related services


Subject to GST

Input tax claimable


48

• Acupuncture

• Reflexology

• Naturopathy

• Massage

• Reflexology

• Homeopathy

• Ayurveda

• Aromatherapy

• Chinese Medicine

Traditional & Complementary Medicine Services (T/CM)


Subject to GST

Input tax claimable


Thank you

BAHAGIAN GST

JABATAN KASTAM DIRAJA

MALAYSIA

53

Enquiry

51

Enquiry

i) Ibu Pejabat Kastam Diraja Malaysia

Bahagian GST,

Aras 3 & 4, Blok A, Menara Tulus,

No. 22, Persiaran Perdana,

Presint 3, 62100 PUTRAJAYA.

ii) GST PORTAL – http://[email protected]

iii) Customs Call Centre (CCC)

Tel: 03- 78067200

Fax: 03- 78067599

Email: [email protected]

mailto:[email protected]

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GST ON HEALTHCARE SERVICES - 302 Found · 2014-11-14 · 11 CANADA UK AUSTRALIA SINGAPORE/ NEW...

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