Republic of Türkiye
REVENUE ADMINISTRATION
Istanbul Tax Office Directorate
Income Laws Group Directorate of Income and Corporate Taxes
Date: 24.07.2024
Number: E-62030549-125[10-2021/229]-….
Subject: Taxation of hair transplant services provided to non-resident individuals
In the private ruling request referenced, it is stated that your company provides hair transplant and medical aesthetic services authorized by the Ministry of Health. It has been understood that information is requested on whether the income obtained from hair transplant services provided to individuals not residing in Turkey can be deducted from corporate income according to Article 10, paragraph (ğ) of the Corporate Tax Law. Our opinions on the subject are explained below.
According to Article 10, paragraph (ğ) of the Corporate Tax Law No. 5520, titled “Other Deductions,” it is stipulated that 80% of the earnings obtained exclusively from the activities of service enterprises operating in the fields of architecture, engineering, design, software, medical reporting, accounting records, call centers, and data storage provided in Turkey to persons not residing in Turkey, or to those whose workplace, legal and business center is located abroad, and from the activities of enterprises operating in the fields of education and health under the supervision and permission of the relevant ministry and providing services to non-resident individuals in Turkey, can be considered as a deduction in determining the corporate tax base, provided that the entire earnings are transferred to Turkey by the date the corporate tax return is due, and provided that the earnings are shown separately on the corporate tax return. It is also stipulated that for the deduction to be applicable, the invoice or a similar document must be issued in the name of the foreign customer.
Explanations on the subject are made in the “10.5. Services Provided from Turkey to Non-Resident Persons and Institutions” section of Corporate Tax General Communiqué No. 1, and the conditions that taxpayers must meet to benefit from this deduction are included in the “10.5.2. Conditions for Benefiting from the Deduction” section of the Communiqué.
In the “10.5.2.1. Main Activity Subject Written in the Articles of Association of Companies Eligible for the Deduction” section of the same Communiqué, it is stated that: “The main activity subjects of the relevant companies must include the provision of services such as architecture, engineering, design, software, medical reporting, accounting records, call center, data storage, education, and health services. Only one of these services can be provided within the company, or more than one can be provided, provided they are included in the articles of association.
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In order for the earnings obtained by enterprises operating in the health sector to be eligible for the deduction, it is mandatory to operate within the framework of a license obtained from the Ministry of Health. Similarly, enterprises operating in the field of education must operate within the framework of a license or permit obtained from the Ministry of National Education.
It is also possible for businesses engaged in health tourism, provided they are licensed by the Ministry of Health, to benefit from the deduction.”
In light of these provisions and explanations, it is not possible to consider the hair transplant services provided to non-resident individuals as a health service within the scope of Article 10, paragraph (ğ) of the Corporate Tax Law. Therefore, it is clear that the income obtained from your activity, which does not fall under health services, cannot be deducted when determining your corporate earnings.
Source: Revenue Administration
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