HEALTHCARE SHOULD BE GST EXEMPT AS PROMISED IN 2013.
MEDIA STATEMENT
FOR
IMMEDIATE RELEASE
Healthcare
should be GST-exempt
as promised in 2013
Kuala Lumpur, 27 November 2014 – In response to the statement from the Minister of Health, Datuk Seri
Dr. S. Subramaniam, that not all drugs will be zero rate, the Federation of
Private Medical Practitioners’ Associations Malaysia (FPMPAM) calls
for the Government to assess the GST implications for healthcare and fullfill its pledge made in October 2013 on the
Budget 2014 that both public and private healthcare services will be
GST exempt.
On October 10, 2014, at his Budget 2015 speech, our
PM further added that medicines on the National Essential Drug List (NEDL)
would be zero-rated thus giving the impression that the sick who are already
burdened will need not be further burdened by additional tax for what is needed
to treat their illness.
However,
the guidelines and many briefings by the Jabatan Kastam DiRaja’s GST team now
tell a different and rather complicated story.
1.
Not
all medicines (including many essential ones) will be GST-exempt.
Patients
and the public may not be aware that the NEDL is not the complete pharmacopeia
or Wish List for treatment of all the important diseases and all its
complications.
Of
the so-called 2900 items on the NEDL, there are actually only 208 different
medications. Many of the 2900 items includes repetitions of various
preparations (different brands) of the same medications.[1]
Imposing
GST on the many essential medications that are not on the NEDL will increase
the cost of treatment and will be a burden to the sick. Prior to GST all duly
registered medications were exempt from sales and service tax, in other words,
zero percent. With the impending GST the cost of all these medications have
already shot up. It will go up further when the cost of administrating the GST
is passed down the line. Even patients from the government sector who require
these medications will end up paying more.
Treatment
using the restrictive NEDL will be cause a fall in productivity, with increased
sick-leave due to dissatisfaction, morbidity and mortality arising from use of,
and change to different medications, or patients' choice to forego medicines
due to increased costs.
The
Federation urges the Government classify “Zero-rated” on all duly registered
medications (Schedule Poisons Group B & C) including clinical disposables
and essential treatment items like stents, prostheses and to immediately form a
broad-based panel to review the deficiencies and inadequacies of the NEDL.
2.
Healthcare services including surgery and
procedure fees provided by doctors in private hospitals will incur GST
[Ref: Royal Malaysian Custom GST Guidelines on Healthcare Item (12)]
For
healthcare provision in private hospitals, it is clearly stated in the above
that GST exemption is only for services provided by doctors employed by private
hospitals/private healthcare facilities.
This
is a major mistake. The majority of the
doctors especially the specialists in private hospitals are not employed but
work as “independent contractors”. The situation is made even more complex with
the many different individual versions to this legal concept of “independent
contractors” in different private
hospitals and the existence of multiple layers of middle-men agencies like
MCOs, TPAs, and insurers etc. collecting and processing fees before payment is
finally paid to the hospital and only subsequently to the doctor. Each
transaction at each level is fraught with GST implications and complex
computations.
With
this complicated scenario, imposing GST on private doctors’ consultation,
treatment procedures, surgical and other essential treatment fees will not only
be administratively costly and complicated but will also escalate the cost of
providing private healthcare generally.
Patients
will end up paying significantly much more next year for the same treatment.
The multiplier effect will have a major adverse impact on the national
expenditure on healthcare.
3. Other Ancillary items for operating a
clinic are also not exempted.
The
other ancillary items in the running of a private clinic like medical indemnity
insurance, utilities, rental of clinic space, servicing, leasing and rental of
medical equipment including other
non-medical professional fees will also incur GST. Accountants have already
informed doctors that if GST is imposed on medications their accountant’s
professional fees is expected to increase 50% to 60% due to the increased work
because of its complex structure.
4. Healthcare
needs more help, not more taxes
As
a non-subsidized, self-paying provider, the private sector is already taking a
major load off the public healthcare system. Even at this time, the public
healthcare system is already not able to cope with the present demand for
medical care despite the fact that a substantial load of out-patient primary
care is being provided by the private sector.
It
is not true that patients opt for private care because they can afford it and
hence should pay GST. The fact of the matter is that the long queues and
waiting time in public facilities is a major reason why many choose to opt for
private care. They need to get well fast so that they can go back to their jobs
and be productive.
The
private doctors are already severely burdened by the administrative provisions
of the PHFS Act 1998/Regulations 2006. GST imposition is a further burden and a
distraction from the basic objective of providing affordable, accessible and
quality care.
GST
for healthcare in its present form is an administrative nightmare and financial
burden to the provider as well as the recipient. Healthcare
is a basic right of every rakyat. No Rakyat chooses to be sick and if they do
become sick, taxation should not be imposed on an involuntary condition.
We
hope the Government will abide by the PM’s pledge and implement GST exempt
across the board for healthcare services as promised in October 2013. The Trust of the Rakyat must not
be breached.
DR. STEVEN KW
CHOW
President
President
FPMPAM
###
[1] We
must note that the World Health Organisation has two EDL one for adults and one
specifically for children. After combining both lists and eliminating
replications, there are 359 medications (by generic names) in the WHO EDL
compared to our Malaysian NEDL which has only 208 items. Our NEDL has 151
medications less than the combined WHO EDL notwithstanding the fact that the
WHO list has only 6 medications which is specifically for diseases (African
trypanosomiasis & American trypanosomiasis), which is not common in
Malaysia. Thus there are major deficiencies in the Malaysian NEDL.
If
one looks closer our NEDL is clearly not designed to cater for all the
important diseases and complications of the various disciplines of primary and
specialist care. Specific treatment for many common diseases are not in this
NEDL.
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