Statement on the Termination of the Special VAT Refund Program for Foreign Patients’ Aesthetic Plastic Surgery

At the end of December 2025, the special value-added tax (VAT) refund program for aesthetic plastic surgery medical services provided to foreign tourists is scheduled to end.

The Korean Association of Plastic Surgeons is concerned about the serious repercussions of this policy change on Korea’s medical tourism industry and strongly urges the extension or improvement of the program for the following reasons.

1. Concerns over Declining Medical Tourism Competitiveness and the Loss of Patients

Over the past ten years or so, Korea has established itself as a global hub for aesthetic medicine on the strength of world-class medical technology, the brand recognition of K-Beauty, and reasonable, competitive costs. Among these various factors, the VAT refund program introduced to attract foreign patients has served as a particularly important incentive for price-sensitive foreign patients.

However, if the VAT refund program is abolished, the cost advantage that is a key factor in attracting foreign patients will be lost, which is highly likely to drive patients away to competing countries that offer active incentives in the fiercely competitive medical tourism market. In particular, China’s Hainan Province has recently begun to actively pursue a strategy of taking advantage of Korea’s policy gap to leap forward as a medical tourism hub.

2. Diminished Economic Ripple Effects

According to statistics from the Korea Health Industry Development Institute, in 2024 medical tourism-related consumer spending by foreign patients and their companions amounted to approximately KRW 7.5 trillion, the resulting domestic production effect reached KRW 13.8 trillion, and some 84,000 jobs were created. Foreign aesthetic plastic surgery patients are high-value consumers who, in addition to medical expenses, generate active spending on accommodation, transportation, dining, shopping and more.

Considering these cross-industry effects, abolishing the VAT refund could be a decision that goes beyond a simple tax reform and deals a heavy blow to Korea’s tourism industry as a whole.

3. Uncertain Tax Revenue Gains and Adverse Effects

The government expects to collect more VAT by ending the program, but in reality this is highly likely to lead to a substantial loss in total tax revenue, through lower hospital revenues caused by a decline in the number of foreign patients, an overall decrease in tax revenues such as corporate and income taxes, and reduced employment.

In addition, if VAT refunds are no longer available, there is concern that this could lead to the growth of an underground market, including cash payments, the involvement of illegal brokers and the encouragement of tax evasion. This could threaten both patient safety and the transparency of government tax revenue.

4. Lessons from the Case of the United Kingdom

After the United Kingdom abolished tax-free shopping refunds for foreign tourists in 2021, tourist visits declined and spending shifted to competing cities such as Paris and Milan, shaking London’s reputation as the ‘number one shopping destination.’ As this shows, countries that abolish incentives on the basis of short-term fiscal logic suffer the real loss of a decline in the competitiveness of their tourism industry. In Korea’s case, a similar outcome is very likely to be repeated in medical tourism, a highly specialized field.

5. Impact on Small Hospitals and Specific Fields such as Dermatology

The VAT refund benefit has been of great help in attracting foreign patients, particularly for small and medium-sized hospitals, dermatology clinics and hospitals outside the Seoul metropolitan area. Abolishing the refund program could pose a direct threat to the survival of small hospitals that are highly dependent on foreign patients, and could even cause the collapse of regional medical tourism ecosystems.

6. The Need for Policy Predictability and Restored Trust

For many years, the government has pursued a variety of policies and programs to promote medical tourism by foreigners, including the VAT refund, the accreditation system for institutions attracting foreign patients, and marketing support. This decision to abolish the program runs directly counter to that policy direction and could cause a loss of confidence in policy, as well as confusion, among the medical community, investors and foreign patients alike.

The continuity and predictability of policy are key elements in maintaining the quality of medical services and the sustainability of the industry.

7. Conclusion and Proposals

The special VAT refund is not merely a tax benefit but a key policy instrument for maintaining the international competitiveness of Korea’s medical tourism industry and for driving the growth of related industries alongside it. Ending this program could bring economic and industrial losses that outweigh any short-term increase in tax revenue, and could weaken Korea’s competitiveness in the global medical tourism market.

Accordingly, The Korean Association of Plastic Surgeons proposes the following policy alternatives:

1. Extension of the special VAT refund program and institutional improvements to it
2. Before abolition of the program is considered, publication of reports on an objective economic assessment and a competitiveness impact assessment
3. Formation of a policy consultative body with the participation of the medical community, the tourism industry and economic experts
4. Flexible policy design, such as differentiated application by type of foreign patient or by country