# Tax Advantages in Health Services Provided to Foreigners in Turkey # Tax Advantages in Health Services Provided to Foreigners in Turkey **Introduction** Health tourism can be defined as utilizing the medical facilities of a country other than one's country of residence for the purposes of diagnosis, treatment, and rehabilitation of illnesses. In our globalized world, we observe a rapid transformation in the healthcare sector due to the increase in quality of life and high healthcare costs in some countries. To encourage foreign exchange inflow, Turkey has provided certain exemptions in the delivery of goods and services to international clients. Today, we will discuss the tax exemptions granted for healthcare services provided to foreign patients and how these exemptions are applied. --- ## VAT Exemptions in the Law According to paragraph (l) added to the first clause of Article 13 of the VAT Law No. 3065 by Law No. 7104, services of preventive medicine, diagnosis, treatment, and rehabilitation provided exclusively within the body of healthcare institutions and organizations to foreign nationals not residing in Turkey are exempt from VAT when offered by real or legal persons authorized by the Ministry of Health. ### A. Institutions and Organizations Eligible for Exemption To benefit from this exemption, it is mandatory to be a healthcare institution or organization authorized by the Ministry. This includes hospitals (public, private, university), medical centers, polyclinics, and other private healthcare organizations operating with permission from the Ministry of Health, such as family and community health centers, clinics, laboratories, dental health services, ambulance services, dialysis centers, physical therapy and rehabilitation centers, genetic diagnosis centers, hyperbaric oxygen therapy centers, and thermal facilities. ### B. Eligible Individuals and Services Under the Exemption The VAT exemption applies to services of preventive medicine, diagnosis, treatment, and rehabilitation provided to foreign nationals who do not reside in Turkey. The scope of these services is determined according to the relevant legislative provisions of the Ministry of Health. Foreign nationals who do not have a citizenship bond with the Republic of Turkey and are not settled in Turkey according to Law No. 193 can benefit from this exemption. Additionally, individuals who have been granted a blue card under Article 28 of Law No. 5901 and do not reside in Turkey can also benefit. Healthcare institutions providing services under this exemption must verify that the recipient is eligible by checking that the individual's last entry into Turkey is not more than six months prior, based on their passport issued by their country (or blue card for those who have renounced Turkish citizenship). A photocopy of the passport or blue card must be obtained from the recipient before the service is provided. ### C. Services Not Covered by the Exemption Services such as accommodation, transportation, and meals provided alongside the exempt healthcare services are not included in the exemption. Cosmetic services conducted for aesthetic purposes, such as hair transplantation, skin care, wrinkle treatment, and filler applications, are not evaluated within this exemption. ### D. Documentation and Declaration of the Exemption For services provided under this exemption, the invoice must include: * The foreign recipient's full name * Nationality * Passport or blue card number * Nature of the service provided * Location where the service was provided * Service fee VAT should not be calculated on these invoices. In cases where the invoice is issued to insurance companies, foreign social security institutions, authorized agencies, or the Social Security Institution (in situations where the service fee for those residing in countries with bilateral social security agreements is collected by the SSI from the relevant country institutions), the invoice must still include the foreign recipient's details as specified above. These exempt services are declared in the VAT return for the taxation period in which the service was provided, under the "Exemptions—Other Transactions Granting Right to Refund" tab, using the code 334 for "Exemption in Health Services Provided to Foreigners." The "Amount of Deliveries and Services" column should show the VAT-exclusive amount of the exempt services, and the "VAT Calculated" column should be left blank. --- ## Advantages in the Corporate Tax Law Tax regulations aimed at promoting the sector and service exports are not limited to the VAT Law; the Corporate Tax Law also includes incentives through deductions. According to paragraph (ğ) added to Article 10 of the Corporate Tax Law, 80% of the earnings from activities exclusively in the health sector (provided under the permission and supervision of the Ministry) can be deducted from the corporate income, provided that: * The services are rendered to non-resident individuals or entities without a workplace, legal, or business center in Turkey. * The services are utilized exclusively abroad. * The income is transferred to Turkey by the deadline for submitting the corporate tax return for the fiscal period in which the income was earned. Previously set at 50%, this rate was increased to 80% with the amendment made by Law No. 7491, applicable to income and earnings obtained from January 1, 2023. ### A. Services Covered by the Deduction Unlike the VAT Law, which limits the exemption to specific services, the Corporate Tax Law does not specify or restrict services like hair transplantation, skin care, wrinkle treatment, or filler applications. Therefore, these services are understood to be included within the scope of the deduction in the Corporate Tax Law. ### B. Conditions for Benefiting from the Deduction * The services must be among the main activities specified in the company's articles of association and must have received permission and licensing from the Ministry of Health. * Invoices must be issued to individuals or entities not residing in Turkey and without a workplace, legal, or business center in Turkey. * Although the services are provided in Turkey, they must be utilized exclusively abroad. * The earnings must be collected by the deadline for submitting the corporate tax return for the fiscal period in which the income was earned to benefit from the 80% deduction advantage. ### C. Determining and Calculating the Deduction The 80% deduction can be applied to the portion of the income remaining after deducting costs and expenses associated with the services covered by the deduction. This amount is shown in the "Exemptions and Deductions to be Made in Case of Profit" section of the corporate tax return. If the activity results in a loss, no deduction will be applicable. If both deduction-eligible and non-eligible activities are conducted, revenue, expense, and cost elements related to the deductible income must be tracked in separate accounts. If it's not possible to track in separate accounts, shared general expenses can be allocated by proportionally distributing between deductible and non-deductible expenses. ### D. Reporting and Documentation Related to Services Provided Under Ministry Supervision Taxpayers who deduct income under the conditions mentioned must provide information about the foreign recipients for each temporary tax period, including: * Full name or title * Nationality * Passport number * Date and number of the issued invoice * Nature of the service provided * Service fee This information must be submitted as an attachment to the tax return. --- **Conclusion** Turkey offers significant tax advantages for healthcare services provided to foreign nationals, aiming to boost health tourism and foreign exchange earnings. By understanding and appropriately applying VAT exemptions and corporate tax deductions, healthcare institutions can enhance their competitiveness while contributing to the country's economy. If you're a healthcare provider looking to expand your services to international patients, now is the perfect time to leverage these tax benefits. --- *For more detailed information and personalized guidance on how to take advantage of these tax incentives, feel free to contact our expert team.* info@ozmconsultancy.com