VAT Treatment of Medical Professional Services: What Clinics and Doctors Should Know

Value Added Tax (“VAT”) remains one of the most frequently misunderstood tax issues in Thailand’s healthcare sector. While medical services generally are perceived as being VAT-exempt, the legal reality is more nuanced. The Thai Revenue Code (“TRC”) includes a VAT exemption for medical services rendered on a human body, if also rendered by licensed medical professionals in accordance with the laws governing medical practice. If the service structure, payment arrangement, or operational model changes, unexpected VAT exposure may arise.

In practice, VAT exemption applies where a licensed medical professional personally provides diagnosis, treatment, or medical care to patients in accordance with professional regulations. In these situations, the services are regarded as professional medical services and are exempt from VAT. However, the exemption does not automatically extend to all income received by doctors or clinics. Income derived from commercial arrangements, management services, facility rentals, or profit-sharing structures may fall outside the scope of the VAT exemption.

For example, if a doctor is employed by a hospital, and receives remuneration from the hospital as a monthly salary for providing medical treatment, the income typically is VAT-exempt, and treated as employment income. However, if a hospital or clinic collects service fees from patients and later shares the revenue with doctors, the legal characterization of the transaction becomes critical, as the funds received via this approach are treated as taxable income under Section 40 (2) or (6) of the TRC. However, the activities are exempt from VAT.

Similarly, if a doctor operates through a company or provides services via a corporate structure, VAT exposure must be assessed carefully. The TRC increasingly focuses on the substance of the transaction rather than the form of payment. Even in healthcare settings, improper structuring may lead to VAT assessments, penalties, and surcharges. From a business perspective, VAT risks in the medical sector are not limited to tax costs alone, but also extend to VAT registration obligations, tax invoice requirements, output VAT to be collected, and input VAT credit limitations, which can have a material effect on cash flow and compliance burdens.

As Thailand’s healthcare industry continues to expand into medical tourism, specialty clinics, and integrated healthcare businesses, VAT analysis and planning have become an essential part of operational strategy. Early legal and tax structuring can help healthcare providers preserve VAT exemptions while remaining compliant with the TRC.

This article is intended to provide a regulatory overview only, and does not provide a comprehensive analysis or constitute legal advice. Should you have any questions on this or on other areas of tax law, please do not hesitate to contact our Tax Team at SCL Nishimura & Asahi Limited.

Areeya Ananworaraks
Counsel

Anutchakij Soontornraksa
Associate

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