The single most important tax point for healthcare: medical examination and treatment services are not subject to VAT — but the line between “treatment” and “beautification” is where most tax disputes arise.
Which medical services escape VAT
Under the VAT Law 2024 (48/2024/QH15, in force since 1 July 2025), medical examination, treatment and prevention services — consultations, tests, imaging, therapeutic surgery, emergency patient transport — are not subject to VAT. The practical consequence: facilities neither declare nor pay output VAT on these services, but also cannot credit input VAT on goods and services used for VAT-exempt activities — the input tax becomes the facility’s cost.
Cosmetic services: subject to VAT
Cosmetic surgery and beautification not for therapeutic purposes fall outside medical services and must declare and pay VAT like ordinary services. Facilities doing both must separately account for revenue and corresponding input VAT; failure to separate invites assessment and back-tax on the difference.
CIT incentives for healthcare
Medical facilities in socialized sectors (education, healthcare, culture, sports, environment) enjoy corporate income tax incentives — preferential rates and holiday periods under the CIT Law 2025 (67/2025/QH15) and guidance, conditional on sector, location and scale criteria. Note: incentives attach to committed conditions — miss them and they are revoked with back-tax.
Frequently Asked Questions
Is medicine sold inside a hospital subject to VAT?
Yes. Medicines are subject to VAT at the preferential tariff rate (unlike the VAT-exempt treatment service itself). Hospitals must declare output VAT on drug sales and may credit corresponding input VAT.
Does a pure cosmetic clinic get healthcare CIT incentives?
No, if it only does non-therapeutic beautification — that is not socialized healthcare. The facility must prove genuine medical treatment activity.
What if treatment and cosmetic revenue cannot be separated?
The tax authority may assess tax on the inseparable portion. In practice, this is a common back-tax item at multi-service medical facilities.
This article has been quality-reviewed by the FLAW AI Legal Council