Private Clinic Accounting: Medical Services, VAT and the Licence

Turnover tax does not apply to clinics

Under the general rule of Article 461 of the Tax Code, legal entities with total income of up to UZS 1 billion for the tax period pay turnover tax. However, Part Two of the same article lists those to whom it does not apply, and since 2025 the list includes businesses trading in medicines and medical devices and/or organisations providing medical services (item 14; the rule also applies to relations arising from 1 April 2025).

So a clinic that is a legal entity works under the general regime — profit tax and VAT — regardless of its revenue. This should be factored into the financial model from the start: a small clinic that counted on the simplified regime gets full tax accounting from its first month.

VAT: rate and separate accounting

Legal entities of the Republic of Uzbekistan selling goods and services are VAT payers (Article 237 of the Tax Code), and the rate is 12% (Article 258). The current list of exempt supplies in Article 243 does not include medical services: it still contains, among other things, care services for the sick and elderly and products of medical workshops at healthcare institutions, while a number of items were removed from the article from 1 April 2023 by Law No. ZRU-812. If a clinic relies on an exemption from a separate act, its validity should be checked as of the date the services are provided.

If a clinic has both taxable and exempt supplies, only the VAT attributable to taxable supplies can be offset. The offset is determined by the separate and/or proportional method (Article 268), and the proportion is applied to shared costs that cannot be split. The method is fixed in the accounting policy.

Profit tax: when the rate is 0%

Under Article 337 of the Tax Code, taxpayers operating in the social sector apply a 0% profit tax rate, while others pay 15%. For a clinic to qualify as a social sector organisation, the conditions of Article 59 must be met.

• medical services are provided by a medical organisation on the basis of the relevant licence;
• medical services include, in particular, diagnosis, prevention and treatment, as well as dentistry, including dental prosthetics;
• cosmetology services are not part of the eligible category;
• income from eligible activities (including property received free of charge) makes up at least 90% of total annual income;
• the clinic has no income from producing and selling excisable goods.

What happens if the conditions are breached

If the Article 59 criteria are not met, the 15% rate applies from the beginning of the tax period in which the breach occurred, and amended returns must be filed for the past reporting periods (Article 337). In practice this means additional tax for several quarters at once.

Typical reasons for losing the benefit: the share of cosmetology, retail pharmacy sales or premises rental exceeding 10% of income, or operating without a licence for a particular type of medical activity. It is worth monitoring the share of eligible income monthly rather than at year end.

The licence and accounting

The licence affects taxes in two ways. First, the zero rate under Article 59 is tied to services provided on the basis of the relevant licence. Second, a VAT exemption under Article 243 for licensable activities applies only if the taxpayer holds the relevant licences and permits.

So it is sensible to split revenue in the accounts by the types of services listed in the licence: this is both the basis for the 90% calculation and an argument in a tax audit. Services not covered by the licence are recorded separately.

Medicines, consumables and doctors' pay

• Medicines and consumables are recorded as inventories and written off to the cost of services based on actual usage. Usage norms per standard procedure, approved by an internal order, help justify write-offs and track losses.
• Expenses are deductible for profit tax if they are justified and documented (Article 305): the procedure log, requisitions and write-off acts must match in quantity.
• Doctors' pay under an employment contract is subject to 12% PIT (Article 381) and 12% social tax (Article 405). A percentage of revenue paid to a doctor (piece-rate or bonus scheme) is still pay for work and should be set out in the remuneration policy.
• If the clinic engages doctors under civil-law contracts, check that the contract does not mask an actual employment relationship: this is a common source of additional assessments.

Where to start

• accounting policy: method of separate VAT accounting, procedure for medicines, a classifier of services by licence;
• a monthly calculation of the share of eligible income for the 0% rate;
• separating cosmetology and pharmacy sales into distinct revenue lines;
• reconciling the procedure log with warehouse records;
• a remuneration policy for doctors with a bonus formula.