AS we approach the deadline for Goods and Services Tax registration with the Customs Department, there is still much confusion about GST in private healthcare services.
From the beginning, we have been given the assurance that healthcare services will be exempted, as far as patient treatment is concerned. Government clinics and hospitals, and private clinics are exempt from GST, and the latter need not register.
However, with regards to private medical specialists practising in private hospitals, confusion remains, despite meetings with accountants, dialogues with senior officers of the Customs Department and in-house discussions with Customs directors in charge of GST.
GST relates to sales and services tax, and the ultimate payer is the customer. If the customer does need not to pay GST for healthcare services as it is exempt, there should be no need for any party to make payment for GST, because the consultation and treatment fees were never charged as a GST taxable item.
Since healthcare services are exempt, doctors providing healthcare services should not need to register for GST nor do they need to pay for GST, except perhaps for rental costs and management fees.
The consultation and treatment charges, which are capped by a separate act, are exempt.
While private hospitals are providing a mixed supply of services and so need to register, doctors practising under the umbrella of these hospitals should be exempt and need not register.
Medications and drugs used for treatment should be free from GST, rather than having a list of exempted items.
Confusion arises because of the contractual arrangement between the doctor and the private hospital, either as a direct supplier of consultation services or as private limited company, whose staff are providing the consultation services.
Some quarters then contend that these services are contracted or outsourced and, hence, become standard rated under GST criteria. This interpretation should be overruled by the fact that the services are exempt anyway, even though the treatment provided is arranged via a contract between hospitals and doctors. The service bought by the hospital is the services of doctors or dentists, not the treatment charges, and GST may be charged on this management fee, but not on consultation fee, as some accountants or officers think.
Since the government has agreed not to burden the patient by exempting the healthcare services from GST, there should be a clear exemption of the services and consultation fees, which are provided directly to patients.
To exempt patients from the six per cent tax and to impose it on the hospital merely because the services are outsourced and hence, standard rated, is incorrect in principle.
This would mean that healthcare services are standard rated and the fee, which cannot be collected from customers, is now imposed on private hospitals, which will find ways to pass it back to doctors or patients.
Doctors cannot collect from patients and collections are made on their behalf through the hospital administration.
This is the actual service provided by the hospital, that is, to collect fees from the patient directly or through a third-party payer, and this does not include the consultation fee.
While private medical centres and hospitals have to register for GST, private medical specialists should be exempted from this process because they are providing healthcare services, even though these services are bought by hospitals for their patients.
Dr Sng Kim Hockpresident, Association of Specialists in Private Medical Practice