The country’s healthcare sector is projected to cross $50 billion by 2029. Medical tourism is also becoming more popular in the country, especially in Emirates like Dubai. The UAE also introduced corporate tax from 2023, adding more scrutiny to business’ financial records. If you’re running a medical clinic or center, hiring an accounting expert to take care of your medical accounting in UAE and help you stay compliant is a good idea.
Features of Medical Accounting in UAE
Audit preparation
- Medical centers have to make sure that all their records are properly organized in case of audits.
- These documents include bills, receipts, tax records, and insurance payments.
- Your records have to follow the local and international compliance standards.
Managing payroll
- Medical facilities have many types of employees who are all on different pay structures.
- Some of these employees may be paid monthly, some could be hourly, and some could get bonuses or commissions.
- Payroll must follow UAE labor laws and be reported through the WPS (Wage Protection System).
- Your accounts also need to track gratuity payments, vacation pay, and overtime.
Billing and collections
- Medical facilities have to send accurate bills to both patients and insurance companies.
- If payments are delayed, it can cause cash flow problems and affect your daily operations.
- You also have to track which payments have been received and which are still pending.
Financial reporting
- Clinics in UAE have to create financial reports that present an accurate reflection of your company’s financial performance.
- These reports should reflect the overall financial position of the clinic.
- The reports are used to file taxes with the FTA (Federal Tax Authority) and to make business decisions.
Get Certified Expert Help with Your Books
Challenges of Medical Accounting in UAE
- Misclassification of VAT: Without the help of professionals, it can be difficult to understand which medical services are zero-rated or charged VAT in full.
- Tracking insurance claims: In the UAE, most of a clinic’s revenue comes from insurance claims. But delays in claim processing can complicate updating your accounts receivable.
- Cost allocation: Assigning shared costs like rent and utilities to each hospital department is difficult. This can make it hard to figure out which departments are actually profitable.
- Reporting compliance: The UAE follows IFRS (International Financial Reporting Standards). Medical accounting has to stay compliant with these standards as well as follow local regulations.
VAT for Medical Services in UAE
There is a 5% VAT which is applied to most goods and services. However, clinics and medical centers in the country can have certain services classified as zero-rated.
If a medical service is considered to be zero-rated, the patient isn’t charged VAT on the service and the service provider can recover VAT on any expenses related to the service. Some examples of zero-rated services include:
- Injury or illness treatments
- Vaccinations
- Prescribed medication and support devices
- General checkups
Medical services can only be considered zero-rated if they are given by a registered medical professional licensed by the Dubai Health Authority, Ministry of Health and Prevention, or the Department of Health. The medical professional must also be a part of a medical facility with a valid trade license and health permit.
VAT is generally levied on services that aren’t considered to be essential. Some examples include:
- Spa treatments
- Botox and filler for non-health reasons
- Wellness services
- Veneers
If any of these services are prescribed by a doctor for medical reasons like a migraine or to correct dental issues, the VAT will be zero-rated.
An accounting expert can help you manage VAT in UAE by:
- Helping you accurately classify your services for the correct VAT treatment
- Keep you updated on the latest VAT regulations
- Prepare and manage your VAT records
- Implement systems that can help your business avoid VAT penalties
Let A&A Associate Manage Your Healthcare Accounting in Dubai
A&A Associate houses expert accountants that can manage your books and streamline your finances. Additionally, we also offer business setup, tax advisory, and Golden Visa services. Get in touch for a free consultation!
