Patients in private hospitals not exempted from GST

Posted on 4 March 2015 – 08:48pm
Last updated on 5 March 2015 – 11:57am

Annie Freeda Cruez

PETALING JAYA: Professional fees charged by doctors in private hospitals for consultation will be subject to the Goods and Services Tax (GST) when it is implemented from April 1.

Under a new guideline from the Customs Department, the fees are not exempted from GST.

In disclosing this to theSun, Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Jacob Thomas said initially they were told that healthcare will be in the “exempt” category as “they (hospitals) will not be able to claim input taxes on goods and services purchased.

“This sounded very kind and the proper thing to do. But the devil is in the details. This became obvious and clearer to private healthcare providers only in the process of implementation and the explanation which followed,” he said.

The shocking revelation came to light when it was found that in the Customs GST Guidelines of Nov 19, 2014, medical specialists were found to have been reclassified as “outsourced service providers”, in contrast to the same guideline dated June 25, 2014 where they were considered to be “joint providers of healthcare within the hospital”.

Thomas said APHM is concerned and shocked at the possible implications of GST which were never explained clearly to the people.

He said the term “exempt” is misleading and the rakyat are still under the impression that private healthcare costs are under the exempted category just as before.

“Classifying medical specialists as outsourced service providers is ridiculous as they are independent practitioners within a private hospital.

“It is even more ridiculous to say that because they are now categorised as outsourced service providers, their fees will be subjected to GST.

“We feel this is not a rational and fair way of enforcing GST.”

“If the government does not want to burden the rakyat, then medical specialists must remain categorised as joint providers of patient care with the hospitals, and stay in the exempted category as highlighted in the draft which was distributed to APHM on Feb 6,” said Thomas.

The reclassification of medical specialists as outsourced service providers, he said, has caused operational difficulties and some private hospitals are considering modifying their contracts and relationship with the specialists.

He said hospitals are considering various options in invoicing patients for services, with many invoices involved each time they seek treatment.

On the 2,999 drug items proposed for exemption under the National Essential Medicines list, Thomas noted that the list does not include many medications, including those for cancer, which are expensive.

“Medical devices which are not taxed now would also be taxed except for those in the exemption list to be decided and approved,” he said, adding that APHM has submitted a comprehensive list for consideration to Finance Ministry.

All outsourced services like security, housekeeping and laundry will be subject to GST, resulting in an escalation of private healthcare costs which is anticipated to be in the region of 5% or more.

“With so many unknowns, this is only an estimate. The increased cost of drugs, medical supplies, outsourced services will make hospital operations more expensive,” he said, adding that a patient’s bill which will not indicate a GST (except the doctor’s fee charged to the patient) will be much higher.

“The rakyat should not be told that prices will not see more than a 1% increase, when we know the increase will be in the region of at least 5%,” he added.

About Tiffany Tang
Tiffany was a former Financial Controller for INTI Education Group, Malaysia (part of US Laureate International Universities, US). She worked as a Regional Accountant and had been in a regional exposure in few countries such as Singapore, Shanghai, Korea, India, and Japan. She worked for a few large multinational companies in the industry of retail, bulk logistics, computer hardware and civil engineering firm. She has more than 15 years of working experience. She holds a Bachelor (Hons) in Applied Accounting, UK. She is also a member of IFA, UK.

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