South Korea’s beauty tourism players fear ugly impact from tax refund termination

SEOUL – A decade-old tax break that drew foreign patients to South Korea’s cosmetic surgery clinics ends on Dec 31, and the industry is bracing for the economic consequences.

The termination of tax refunds for foreign visitors

seeking cosmetic and plastic surgery procedures has triggered mounting concern across the booming aesthetic medical tourism sector.

Long supported by price competitiveness, the industry warns that losing the tax incentive will not only raise costs for patients but also weaken pricing transparency, a key factor behind its global appeal.

The change is expected to ripple across clinics, brokers and the broader tourism market.

The tax refund’s expiration was finalised after the National Assembly omitted related clauses from the latest revision of the Act on Restriction on Special Cases Concerning Taxation, which passed earlier in December.

Introduced in 2016, the programme allowed foreign patients to reclaim 10 per cent in tax on a wide range of cosmetic and dermatological procedures, including skin rejuvenation, wrinkle-reduction treatments, double-eyelid surgery, fat-dissolving injections and breast augmentation.

Plastic surgeons and industry groups began voicing strong opposition in July when the Ministry of Economy and Finance removed the provision from the government’s 2025 tax plan.

“The tax refund system, created to attract foreign patients, has served as a significant incentive for those sensitive to price,” an official at the South Korean Association of Plastic Surgeons said.

“Ending it removes a key factor behind South Korea’s influx of foreign patients. As other countries offer aggressive incentives, more people could shift to competing medical tourism destinations.”

The aesthetic medicine sector has become one of South Korea’s biggest tourism draws over the past decade. According to government data, total medical spending by foreign patients rose from about 400 billion won (S$352 million) in 2019 to 1.24 trillion won in 2024.

Spending on plastic surgery and dermatology climbed more than fourfold during the same period and now accounts for 77.3 per cent of the total.

Refund payments reached a record 95.5 billion won in 2024 and are expected to rise further in 2025, with 82.6 billion won issued in just the first half of the year.

Industry analysts said the immediate impact of the refund’s removal will be limited. South Korea still benefits from strong international demand for its medical services, a weak won, strained Japan-China relations and visa-free entry for Chinese visitors.

A report by Kiwoom Securities found that foreign dermatology and plastic surgery patients typically receive around 150,000 won in tax refunds per person while Chinese visitors receive an average of 293,000 won.

These amounts may not be large enough to alter short-term travel decisions. The report added that South Korea continues to offer superior quality relative to price.

Travel platform Yanolja shared similar findings, noting that “quality and trust in South Korea’s medical services are creating a loyal demand base”, with 38.6 per cent of foreign medical tourists having visited South Korea more than four times.

But industry officials argue that the country’s competitive edge may weaken as rival destinations upgrade their medical tourism strategies.

Singapore and Thailand have decades of experience and sophisticated tourism infrastructure, while China is accelerating its effort to build a medical tourism hub in Hainan province to retain domestic demand.

South Korea currently captures 62 per cent of China’s outbound medical and beauty tourism market.

“Many Chinese consumers are extremely price-sensitive,” said a management official at a beauty clinic in southern Seoul’s Gangnam district. “If South Korea is perceived as becoming more expensive, more patients may stay in China or turn to South-east Asian destinations.”

Some experts warn that abolishing the system could worsen transparency in pricing – a problem South Korea has struggled with in the past due to illegal brokers and inflated billing.

A report by the South Korea Institute of Public Finance noted that the tax refund programme helped curb excessive brokerage fees and overcharging by allowing foreign patients to verify treatment costs through the refund process.

“The system showed clear effectiveness compared with post-treatment receipts,” the report said, adding that the incentive encouraged patients to cross-check prices and reduced opportunities for intermediaries to manipulate bills.

With the refund programme now considered unlikely to be revived in the short term, medical tourism operators say they will continue lobbying for its reinstatement, citing cases in which similar tax incentives – such as those for foreign tourist accommodation – were restored after industry pushback.

“Considering the potential negative impacts of the programme’s abolition, we plan to keep urging the government to reconsider the issue and reinstate the refund system,” an official at Global Tax Free, a tax refund operator, said. THE KOREA HERALD/ ASIA NEWS NETWORK