GST and private doctors II

gst malaysia

GST is set to be implemented for the first time in Malaysia in less than 10 days time. Right up till this last moment there is still some confusion in the healthcare sector, not the least due to Customs constantly changing their guidelines. At first the impression given was that Healthcare was to be GST exempt but it is not truly so. Many areas will be subject to standard rated GST. “GST exemption” for the end consumer is probably a meaningless term as eventually businesses will pass the cost down to the end consumer. If the Malaysian Government truly wants to help the Rakyat, then the Healthcare sector should be zero rated.
However as it stands, that is not the case and so the latest news is that Customs, Ministry of Finance, Ministry of Health and Doctors associations (MMA) had a meeting this week. The MMA President, Dr. Krishna Kumar Hari Krishnan made a statement in the social media:

The Malaysian Medical Association (MMA) together with the Association of Private Hospitals (APHM) met with the Director General of Customs and of the Customs and Ministry of Finance. The discussion of the GST was carried out and we were told that the tax would be collected from transactions of doctors providing independent consultation and procedures. Thus this is how we stand
EXEMPT LIST
All consultation and procedural fees under the Private Health Care Facilities Act (PHFA) charged in a registered facility of the PHFA as long as the doctor is the owner or an employee of the said premises
An increased list of medicines from the current 4000+ out of 17,000+
Medical equipment in an approved list
STANDARD RATED
All procedures outside the PHFA
Locum fees
Supplements and nutritional products
Aesthetics
Medicines outside the above list
Equipment outside the above list
All outsourced services
Private specialists who are not practising in their own premises including provision of services to private hospitals
The problem arose on how to collect the GST without showing it. This was the decision shown below as a simplified example
Doctor see patient
Doctor charges RM100 (maximum allowable in the Schedule 13 of PHFA)
As it is charged through the hospital 6% (standard rate) is charged. (RM6 in this case)
Hospital prepares total bill for patient
Patient is charged RM100 for consultation by doctor and RM6 for disbursement or processing fee (This would be done for procedures and surgeries)
Patient is therefore not charged GST and the health facility is GST exempt

So please note, for private doctors who practice “Aesthetic medicine” – this is subject to standard rated GST
GPs who engage in locum services and those doctors who do locums – this is also subject to standard rated GST
Supplements and nutritional products are subject to standard rated GST
Majority of medicines are subject to standard rated GST (only a limited list is exempt and this list is still not final)
What also changed is a late hour decision by Customs to declare that private specialists who work in private hospitals (the majority are considered “independent contractors” and not employees as such) are subject to standard rated GST. This is because Customs insists that the specialists are performing an “outsourced” service. From the above statement, it seems that the GST incurred for this will be passed down to the end consumer (in whatever name).

So everyone, brace yourself. The cost of healthcare will rise come 1 April 2015 as a result of GST.

Doctors who are still confused and seek to discuss with colleagues can join our doctors forum Dobbs and participate in the GST discussion thread
(Malaysian doctors who are not yet members of the Dobbs forum : membership is free. Instructions on how to join are at the bottom of http://dobbs.my)
Doctors can also join our fast growing closed facebook group for Dobbs for updates and news. Please watch out for a message in your Facebook inbox as your MMC number may be requested.

Related post:
GST and Private doctors

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Malaysian physician, haematologist, blogger, web and tech enthusiast

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