Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Tax Code Assignment for Medical Expenses Introduction
Even though it is not an offence or seriouswrong doing by using different tax code formedical expenses, I would rather follow thefacts stated in the Act, regulations, guidelinesand DG’s decisions to assign proper tax codefor medical expenses.
For medical expenses, it shall involve usingthe following five tax codes, generally:
1. EP – Exempt Purchase 2. NR – Not Registered Businesses 3. BL – Block Medical Expenses 4. ZP – Zero Rated Medication 5. OP – Out of Scope by Government
Hospital
I observe that many businesses andorganizations use different tax codes formedical expenses due to their nature for GSTpurpose. The following figure shows that businessesare usually assigning EP – Exempt Purchaseor NR – Not Registered for clinic medicalexpenses. Actually, there are facts to supporton when we use the correct tax code (EP orNR) for the clinic medical fee. You may readthe summary below.
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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General Tax Code Matrix for Different Medical Establishments
Type of Healthcare Businesses Tax Code
Document
Clinic EP Cash bill, receipt, invoice Government Hospitals OP
Herbal Shop Sdn Bhd Traditional Medicine Practitioners (Not GST Registered)
NR
Clinic Sdn Bhd BL
EP
Tax invoice, Simplified Tax Invoice & Invoice
Medical Sdn Bhd or Bhd BL
Private Hospitals BL
EP
Pharmacy Sdn Bhd BL
ZP
Tax Invoice or Simplified Tax Invoice Herbal Shop Sdn Bhd
Traditional Medicine Practitioners (GST Registered)
Summary of Tax Code Assignment for Medical Expenses
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Tax Code
Type of Healthcare Businesses Description Document Reference
BL
Clinic XYZ Sdn Bhd Medical clinic which provides mixed supplies and incorporated
Invoice and Tax Invoice
1;2;4;6;7;8;10 & 12
FOMEMA (Foreign Workers Medical Examination Monitoring Agency ) by Unitab Medic Sdn. Bhd. (312291‐
X) FOMEMA Web
Medical establishments which provide medical and other services Other services such as registration fee, administration fee and non‐medical related service fee
Qualitas Medical Group Sdn Bhd (449628‐P) or medical groups
Pantai Hospitals Sdn Bhd (466313‐V) or private hospitals
Other private healthcare establishments which are incorporated and GST registrants
XYZ Pharmacy Sdn Bhd Medicine from pharmacy which is standard rated
Tax Invoice or STI
EP
Clinic ABC Clinic provides medical services Clinic is not required to register for GST
Cash bill, receipt, invoice
1;2;3;5;9
Private hospitals Provides medical services
Sells medicine to its own patient and staff
OP Government hospitals Provides medical services
Sells medicine to anyone
Cash bill, receipt
13
ZP Private pharmacy National Essential Medicine Tax Invoice or STI
10
NR Any businesses Traditional Medicine Practitioners
Herbal Shop, Acupuncture, orthopaedics and etc
Any medical businesses not liable to register
Invoice, cash bill, receipt
4
TX General insurance company Foreign workers’ compensation scheme
Tax Invoice 11
Summary of Tax Code Assignment for Medical Expenses
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Supporting References for Tax Code Assignment – Medical Expenses
Reference 1: Definition of healthcare Services GST Exempt Order Gazette 2014 Paragraph 18
DG Decision Item 2 – 3/2015
Guide on Healthcare Services [03112015]
Reference 2: Definition of exempt supply
Supporting References for Tax Code Assignment for Medical Expenses
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Supporting References for Tax Code Assignment for Medical Expenses
Reference 3: Non Registration of a person who make wholly exempt
supplies
Guide on Registration [13012016]
Guide on Healthcare Services [03112015]
Reference 5: Non Registration of a private healthcare facility
Reference 4: Registration of a person who make taxable suppliesGuide on Registration [13012016]
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Guide on Healthcare Services [03112015]
Reference 7: Registration Fee, Administration Fee,
Examination Fee and Miscellaneous Fee and Charges are subject to GST
Guide on Healthcare Services [03112015]
Reference 6: Registration of a private healthcare facility which is mixed supplier
Supporting References for Tax Code Assignment for Medical Expenses
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Supporting References for Tax Code Assignment for Medical Expenses
Guide on Healthcare Services [03112015]
Reference 8: Medicine from Pharmacy is Block Q3
Reference 9: Medicine from hospital and private healthcare
establishment through prescription is exempted – Q4
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Supporting References for Tax Code Assignment for Medical Expenses
Reference 10: Medicine from Pharmacy is Zero Rated if it is
National Essential Medicine List
GST Zero Rated Order Gazette 2014 & Amendments in 2015
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Supporting References for Tax Code Assignment for Medical Expenses
Reference 11: Disallowance of Input Tax Credit on Insurance and Takaful Contracts
Guide on Input Tax Credit [29122015]
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Regulation 36, GST Act 2014
Supporting References for Tax Code Assignment for Medical Expenses
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Supporting References for Tax Code Assignment for Medical Expenses
Reference 12: Disallowance of Input Tax Credit on Medical
Expenses
Guide on Input Tax Credit [29122015] Regulation 36, GST Act 2014 (f)
Reference 13: Medical Treatment by Government Hospitals
is Out of Scope
Guide on Healthcare Services [03112015]
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Author: Stanley K Wong | [email protected] Title: Tax Code Assignment for Medical Expenses | Published: 12/02/2016
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Tax Code Chart of Accounts
BL
Medical Fee; Medical Expenses Hospitalization Surgical Accident Insurance & Takaful Scheme Medicine (Pharmacy) Staff and Foreign Workers’ Benefits GST Block
TX Foreign Workers’ Expense Foreign Worker Compensation Scheme*
EP Medical Fee; Medicine Expenses (Private Clinic)
OP Medical Fee; Medicine Expenses (Government Hospitals)
ZP Medical Expenses (NEM)
NR
Medical Expenses (Traditional medicine practitioners**) Medical Expenses (Acupuncture; orthopaedics & etc)
*It is part of obligation under Section 26(2) Workmen’s Compensation Act 1952
**If the traditional medicine practitioner is GST registrant, then it is BL
Businesses need not to disclose adjustments in 6a – Standard Rated Acquisition 6b – Input Tax:
Medical expenses value
Block input tax
Other GST Impacts
Conclusion
Upcoming Event You may be interested in the following event:
Preparation for GST Audit
Avenue Business Centre Phileo Damansara 1
February 26, 9:30 A.M. ~ 5:30 P.M.
Training Fee: RM689.00 Inclusive 6% GST
Please contact Stanley Wong for registration at
Tel: 603-27247183 Mobile: 012-3052908
The following accounting code may need to keep the records:
GST Accounting GST-03 Submission
Proper Records Keeping Even though it is not a wrong doing by assigning other tax code to medical expenses, I emphasize on the maintenance of accounting records is necessary to be accurate. GST Compliance As the Act, regulation, guidelines and DG’s decision mentioned about the proper classification of medical supplies, I would comply with those facts for GST tax code assignment purpose.
Disclaimer:
This Article has been prepared by Stanley Wong, SW Project Consulting Sdn Bhd (SWPC).This Article is meant solely for use by its readers and is not for physical circulation in public. This Articleconstitutes a personal view and interpretation on tax code assignment for medical expenses that is givenunder GST Act 2014 in Malaysia. This Article is based on information that we consider reliable, opinionsexpressed are our current opinions as of the date appearing on this Article. While all efforts have been takento check the accuracy of the information provided herein, we do not warrant that is free from any technicalinaccuracies or typographical errors. Stanley Wong and SW Project Consulting Sdn Bhd shall not be liable fordamages of any kind arising out of or in connection with the use of the information in this Article.
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