Checking into the Hospital? Don’t Worry About VAT on Your Bill

Everyone tries to avoid getting sick, especially if it means going to the hospital. For those without coverage from insurance or BPJS, a hospital visit often means preparing funds to pay for medical services.

It can feel even more worrisome to see Value Added Tax (VAT) listed on the bill. However, there's no need to worry about the VAT label. How so?

Read: Government Plans Tax Relief for Medical Devices

Healthcare Services as a VAT Object

Since 2022, healthcare services have officially been classified as VAT objects. However, despite being designated as VAT-applicable, healthcare services are among those exempt from VAT charges.

This is outlined in Government Regulation (PP) Number 49 of 2022, which is a derivative of Article 4A, paragraph (3) of the Value Added Tax (VAT) Law, amended by Law Number 7 of 2021 on the Harmonization of Tax Regulations (HPP).

In general, there are 10 types of Strategic Taxable Services (JKP) exempt from VAT, including:

• Medical healthcare services
• Social services
• Postal services with stamps
• Financial services
• Insurance services
• Educational services
• Broadcasting services that are not advertisements
• Public transportation services on land and water, and domestic air transportation that is an integral part of international transport
• Manpower services
• Public coin-operated telephone services
• Money transfer services via postal orders

Read: Tax Issue Amid Polemic on Increase in BPJS Kesehatan

List of VAT-Exempt Healthcare Services

Healthcare services exempt from VAT fall into two main categories: individual and community healthcare services, and animal/veterinary healthcare services.

For individual and community healthcare services, VAT exemption applies to certain categories, based on both the provider and the location of the service.

The specific categories of VAT-exempt healthcare services include:

Healthcare services provided by medical and other healthcare professionals, including:

• Healthcare services provided by medical and other healthcare professionals, including:

a. General practitioners, specialists, dentists, and dental specialists
b. Health services
c. Midwifery services
d.Nursing services 
e.Psychiatric services

• Healthcare services provided at healthcare facilities, including:

a. hospital services
b. maternity hospital services 
c. health clinic services 
d. primary and advanced healthcare facilities
f. health laboratory, and 
g. sanatorium

• Services provided by non-healthcare professionals, including:

a. dental technicians
b. traditional birth attendants
c. paramedic
d. psychologist, and
e. Alternative medicine practitioners, including spiritual healers

Understanding these VAT regulations on healthcare services can help ensure that we don’t panic when seeing VAT on a hospital bill.