South Korea Ends Ten Percent VAT Refund for Medical Tourism, Potentially Driving Foreign Patients to Competing Destinations Like Singapore and Threatening Their Global Market Standing

Published on December 11, 2025

The South Korean medical tourism industry is mired in uncertainty after the government announced the end of its decade-long 10% VAT refund scheme for foreign patients undergoing cosmetic surgery from December 31, 2025. The program, launched in 2016, granted a tax refund to visitors seeking facelifts, skin revitalization, breast augmentation, and double-eyelid surgery in an attempt to enhance the country’s medical tourism appeal. The incentive has rendered South Korea as a global frontrunner in aesthetic medical tourism, attracting patients from China, Japan, and the United States, among other countries.

The government’s move to scrap this program has met fierce resistance from the Korean Association of Plastic Surgeons, which has cited that this move might force the cost-conscious foreign patients to other competitive medical hubs such as Singapore and Thailand, where advanced healthcare infrastructure and attractive incentives prevail, thus posing a threat to South Korea’s share of this lucrative medical tourism market.

The Economic Impact: Losing a Key Competitive Advantage

The VAT refund program played a pivotal role in South Korea’s medical tourism sector, making treatments more affordable and boosting the country’s position in the global market. In 2024, approximately 1.17 million medical tourists visited South Korea, spending US$840 million on healthcare. Dermatology and cosmetic surgery accounted for the majority of these visits, with 56.6% of all procedures being dermatological. The refund system was a key factor in keeping prices competitive, and its removal is expected to lead to higher costs for foreign patients.

The Korean Association of Plastic Surgeons believes that price sensitivity was a major reason behind South Korea’s dominance in the medical tourism industry, particularly among Chinese and Southeast Asian patients. The absence of the VAT refund will raise prices and affect the price transparency that attracted thousands of foreign patients to South Korean clinics in the first place. As other countries offer aggressive incentives to attract medical tourists, more people could turn to destinations like Thailand and Singapore, which are aggressively marketing themselves as cost-effective alternatives.

The Growing Competition in Global Medical Tourism

The global medical tourism market, valued at US$43.51 billion in 2025, is expected to reach US$252.94 billion by 2034. This growth presents opportunities for countries to capture a larger share of the market. South Korea has historically dominated 62% of China’s outbound medical and beauty tourism market, but the termination of the VAT refund could erode this position.

Countries like Thailand and Singapore are well-positioned to capitalize on South Korea’s policy shift. Both have already established themselves as leaders in medical tourism, offering state-of-the-art facilities, affordable treatment options, and attractive travel incentives. Additionally, these nations are part of the growing trend where Southeast Asia is becoming a preferred destination for those seeking medical services at a lower cost compared to Western countries.

Impact on South Korea’s Medical Tourism Sector

The removal of the VAT refund threatens to undermine South Korea’s position as a premier medical tourism destination. In 2024, the South Korean government refunded 95.5 billion won (US$64 million) to medical tourists, making it one of the most competitive markets in terms of cost-effectiveness. Now, with the VAT refund ending, South Korea risks losing its edge in the international medical tourism market.

A beauty clinic official in Seoul’s Gangnam district noted that Chinese consumers, particularly, are highly price-sensitive, and any increase in treatment costs could make Southeast Asian destinations more attractive. Thailand and Singapore, both offering advanced healthcare infrastructure and cost-effective treatments, are expected to draw more medical tourists if South Korea is perceived as becoming more expensive.

Calls for Reinstating the VAT Refund System

In response to the looming changes, industry groups are calling on the government to reinstate the VAT refund system or introduce alternative incentives to mitigate the potential loss in foreign patient volumes. Drawing from past efforts, such as the restoration of tax concessions for foreign tourist accommodations, medical tourism businesses have stressed the importance of this system in maintaining South Korea’s competitiveness.

Officials from Global Tax Free, a VAT refund operator, have emphasized the long-term consequences of removing the incentive, noting that high medical costs may deter future patients and hinder the growth of the country’s medical tourism sector. As other countries enhance their medical tourism offerings, South Korea risks falling behind in attracting international patients, particularly in a market that is expected to grow exponentially in the next decade.

Future of South Korea’s Medical Tourism Industry

The end of the VAT refund scheme will likely have a long-lasting impact on South Korea’s medical tourism industry, especially in terms of foreign patient volume and pricing competitiveness. As the medical tourism market continues to expand globally, South Korea will need to find new ways to retain its market share. Improved treatment packages, better customer service, and innovative incentives may help sustain the country’s role as a leader in aesthetic medicine and medical tourism.

However, in the face of growing competition from Southeast Asia and other regions, South Korea will need to adapt to the changing market dynamics and consider how to maintain its status as a top destination for cosmetic surgery and health tourism.

A Critical Crossroad for South Korea’s Medical Tourism

In a situation where South Korea prepares for the end of its VAT refund program, the future is not certain regarding the country’s medical tourism industry. That it faces increasing competition from Singapore and Thailand, and new destinations offering many of their services at much more modest prices means the country has little time to waste. It means that the sector needs to grow away from pricing incentives to remain competitive and always be a hot destination for international patients who want cosmetic surgery and other procedures. In this respect, policy adjustments and strategic marketing will be vital in safeguarding its place within the expanding medical tourism industry globally.