Some private clinics in Kazakhstan will close down if government abolishes VAT exemptions for paid healthcare services - expertKazakhstan is discussing the government’s plans to abolish the value-added tax (VAT) exemptions for paid medical services. The introduction of reduced VAT rates on medicines and healthcare services -- 5% in 2026 and 10% from 2027 -- will significantly increase wait times for state-funded specialist care and force many small and medium-sized clinics out of the market, Marat Kairlenov, the director of Ulagat Consulting Group, told Interfax-Kazakhstan.WAITLISTS FOR STATE-FUNDED HEALTHCARE SPECIALISTS COULD REACH YEARSThe cancellation of VAT exemptions for paid medical services will have "very dire consequences, leading to a collapse of the healthcare system," Kairlenov said.According to a study by the Social Health Insurance Fund, only 16% of all outpatient visits to narrow-specialty doctors fall under the healthcare insurance scheme. The study covered 14 million patient visits to found that 84% of all consultations were one-time visits, the expert said."This figure [of 16%] might even be lower because the patient could, for example, see a general practitioner, receive treatment and then return only for a medical certificate without consulting a narrow-specialty doctor. In that case, the share of state-funded specialist services could be as low as 10%, meaning the patient flow to state-contracted healthcare facilities may rise six- to tenfold," Kairlenov said.Such a sharp increase in the number of patients will overwhelm the healthcare system."Doctors, fearing criminal liability for medical errors, will refuse to diagnose or prescribe treatment without narrow-specialty consultations, while wait times for narrow specialists will be measured not in weeks or months but in quarters or even years," Kairlenov said.SOME CLINICS WILL CLOSE DOWNThe problem isn’t just about the VAT but also about its administration, according to Kairlenov. Healthcare providers, who previously outsourced accounting services, will now have to hire in-house accountants."Currently, small and medium-sized healthcare businesses, like in other sectors, outsource accounting services, paying 50,000–80,000 tenge per month. In addition to the introduction of VAT, which will be 0% for state-guaranteed healthcare service, 10% for paid medical services and 16% for the rest of the economy, corporate income tax exemptions will also be cancelled. We should also bear in mind mandatory income declarations for entrepreneurs and their families. As a result, the commercial clinics will need full-time accountants, costing them an additional 7 million tenge annually," Kairlenov said.Beside the accounting costs and the 10% VAT, rising rates for utility services, rent and supplies should also be taken into consideration, which will force the private healthcare institutions to raise their prices by 30–50%. Smaller providers with annual revenues of 50–100 million tenge may have to leave the market, he added.Surveys conducted by Ulagat Consulting Group and the National Healthcare Chamber suggest a decline in the number of private medical providers."Both studies came to similar conclusions: about half of respondents said they’d rather close down their business than deal with VAT and corporate taxes, and about 80–90% of them said they will freeze their investment activities in the healthcare sector," Kairlenov said.According to the National Statistics Bureau, healthcare investments fell by 1.9% in 2024 after a 51.1% surge in 2023."The drop is even starker for self-funded investments by medical organizations -- from plus 75% in 2023 to minus 28% in 2024. The situation is deeply concerning," Kairlenov warned.GOVERNMENT’S RESPONSEInterfax-Kazakhstan asked the Ministry of National Economy for comment. The ministry stated that approaches to these issues are still under discussion."As part of fiscal reforms, the government proposes raising the standard VAT rate to 16% while applying a 10% rate to medical services, medicines and medical equipment. Final decisions will be made during parliamentary review of the Tax Code," the ministry said. (ICE ALMATY)

Fonte notizia: INTERFAX