The tax advantages of earnings derived from the services provided by healthcare institutions operating in Turkey to real persons residing abroad are an important issue for both the business world and fiscal practices. In this article, we will discuss the place of these earnings within the scope of tax regulations and the related advantages.

Corporate Tax Law and Health Services

Article 10 of the Corporate Tax Law No. 5520 stipulates that 80% of the income derived from certain services, such as health services provided in Turkey to non-residents and utilized abroad, can be deducted from the corporate tax base. There are some important conditions to benefit from this deduction:

Transfer of Earnings to Turkey: Earnings must be transferred to Turkey until the filing date of the corporate tax return.
Invoice Scheme: The service invoice or similar document must be issued on behalf of the customer abroad.
In addition, in order to benefit from this regulation, health services must be provided subject to the approval of the Ministry of Finance and the relevant ministries.

The Concept of Export of Services and 5-Point Tax Deduction

Article 32 of the Corporate Tax Law stipulates that companies that export will receive a reduced corporate tax rate of 5 percentage points on their export earnings. However, there is a critical detail here: Export of services includes services rendered for customers abroad and utilized only abroad.

In the section titled “32.1. Corporate tax rate and provisional tax” of the Corporate Tax General Communiqué No. 1, it is stated that export of services in the application of this article includes services rendered for a customer abroad and utilized abroad

Since health services require the presence of the customer in Turkey, these services do not fall within the scope of exports. Therefore, the 5-point deduction cannot be applied to the 20% of earnings from health services that do not benefit from corporate tax deduction.

Conclusion and Evaluation

If you are a business operating in the health sector and you provide services to real persons resident abroad, you can benefit from the 80% tax deduction advantage within the scope of subparagraph (ğ) of the first paragraph of Article 10 of the Corporate Tax Law No. 5520. The other conditions in the article should also be checked carefully and make sure that the service provided in the enterprise falls within this scope.

Since these earnings are not considered within the scope of service exports, it is not possible to benefit from the 5-point corporate tax rate reduction for the 20% portion that does not benefit from the discount.

Ali KARAKUŞ

CPA, Independent Auditor

December 9, 2024

Istanbul


Legal Notice: The information in this article is intended for information purposes only. It is not intended for professional information purposes specific to a person or an institution. Every institution has different requirements because of its own circumstances even though they bear a resemblance to each other. Consequently, it is your interest to consult on an expert before taking a decision based on information stated in this article and putting into practice. Neither Karen Audit nor related person or institutions are not responsible for any damages or losses that might occur in consequence of the use of the information in this article by private or formal, real or legal person and institutions.