Tax treatment of income of medical specialists in private hospitals

Technical guidelines on the tax treatment of income of medical specialists in private hospitals

The IRB has recently published on its website technical guidelines on the tax treatment of income of medical specialists (specialists) in private hospitals, dated 16 March 2022. The Guidelines are in Bahasa Malaysia and are titled “Garis Panduan Layanan Cukai Ke Atas Pendapatan Pengamal Perubatan (Doktor Pakar) Di Hospital Swasta Sama Ada Ditaksir Di Bawah Individu Atau Syarikat”.

The Guidelines were published to clarify the income tax treatment for specialists providing medical services (e.g., treatment, consultancy, surgical, etc.) in private hospitals. The Guidelines explain and provide various scenarios to demonstrate the circumstances under which income derived by the specialists would be assessed as individual business income under Section 4(a) of the Income Tax Act 1967 (ITA), individual employment income under Section 4(b) of the ITA, or a company’s business income under Section 4(a) of the ITA. 

The Guidelines also explain and provide examples to clarify certain types of expenses which may be deductible for tax purposes, including the following:

• Professional indemnity insurance

• Fees incurred to attend Continuing Professional Development (CPD) seminars

• Employer’s contribution to the Employees Provident Fund. The Guidelines also set out the circumstances under which such contribution would not be tax-deductible. 

• Rental of consultation rooms, surgical instruments or operating rooms in a private hospital