Turkey Revised VAT Rates: Impact on Healthcare and Telecom Sectors

Turkey recently revised VAT rates, reducing the tax on approved medical products and special-purpose foods to 10 percent, while telecom equipment faces a standard 20 percent VAT. These changes, effective from November 14, 2024, are expected to impact pricing and accessibility in the healthcare and telecom sectors, respectively.

Turkey has recently introduced significant changes to its Value Added Tax (VAT) rates, affecting critical sectors such as healthcare and telecommunications. The revisions, approved on November 14, 2024, aim to streamline taxation policies while ensuring targeted fiscal regulation in these industries.

Among the changes, medical products and special-purpose foods approved by the Ministry of Health now attract a reduced VAT rate of 10 percent, while telecom equipment faces a standard 20 percent VAT.

These adjustments, announced through a Council of Ministers Decision and published in the Official Gazette, are expected to influence businesses and consumers alike, reshaping pricing and accessibility in these key markets.

Key changes in VAT rates

Medical products

Turkey’s revised VAT regulations have introduced a reduced tax rate for specific medical products. Special medical-purpose foods that are approved by the Ministry of Health are now subject to a 10 percent VAT rate.

However, eligibility for this rate is contingent upon the products being listed under a specific Council of Ministers Decision, ensuring that only qualified items benefit from the reduced tax.

Telecom equipment and other goods

For telecom equipment and other goods subject to special consumption tax, a general VAT rate of 20 percent has been mandated.

This applies both to the import and the delivery of these items, aligning them with Turkey’s broader taxation framework for such products.

Expected implications of the VAT adjustments

For businesses

The revised VAT rates are likely to influence operational costs and pricing strategies across the healthcare and telecom sectors. Companies dealing with special medical-purpose foods may benefit from the reduced 10 percent VAT, which could encourage wider distribution and accessibility.

However, businesses in the telecom industry may face higher costs due to the 20 percent VAT on imports and deliveries, potentially impacting their procurement processes and supply chain dynamics.

For industries

The healthcare sector may experience improved access to essential medical products, fostering better health outcomes. Meanwhile, the telecom industry could face challenges in maintaining competitive pricing and expanding services, potentially influencing the pace of innovation and infrastructure development.

Overall, these changes reflect a balancing act between promoting affordability in critical areas and ensuring robust tax revenue streams.

Opportunities in Turkey’s key economic sectors

Healthcare

Turkey’s healthcare sector presents both challenges and opportunities for pharmaceutical and medical device companies navigating its dynamic landscape. With nearly 80 million people and government-provided healthcare, the market holds significant potential. However, socio-economic conditions, evolving patient demands, and regulatory complexities shape the market’s accessibility.

Emerging trends, such as the integration of digital health solutions, patient-centered care, and innovative decision-making frameworks like multi-criteria decision analysis (MCDA), are redefining the operational environment and providing pathways for growth.

Inflation and pricing pressures, compounded by fluctuations in the Turkish lira, pose significant hurdles, particularly for imported products. To address these challenges, companies must adopt innovative strategies to maintain pricing stability and ensure the availability of essential medicines.

At the same time, the rising adoption of telemedicine and legal frameworks supporting remote consultations signal a shift towards more accessible and technology-driven healthcare. These developments, along with greater patient involvement in care decisions and targeted patient support programs, underline the growing emphasis on delivering comprehensive, outcome-focused healthcare solutions.

Despite the opportunities, challenges such as lengthy regulatory approvals, increasing out-of-pocket expenses for patients, and complex market dynamics create barriers for global companies. Collaborative efforts with local stakeholders, robust real-world evidence to demonstrate product value, and innovative reimbursement schemes can help companies navigate this environment.

Telecommunications

Turkey’s telecom sector is set for robust growth, driven by increasing smartphone penetration, the expansion of 4G and 5G networks, and widespread digital transformation across industries. Forecasted to grow at a compound annual growth rate (CAGR) of 4.30 percent from 2024 to 2032, the sector is benefiting from heavy investment in infrastructure, the rising adoption of Internet of Things (IoT) devices, and the demand for high-speed internet. These trends are not only enhancing connectivity but also fueling innovation in critical areas such as healthcare, agriculture, and manufacturing.

The integration of IoT and smart technologies is a major catalyst in the market’s evolution. Businesses and consumers alike are leveraging these advancements to improve efficiency and streamline operations. To support this growth, Turkey’s telecom companies are prioritizing network upgrades, particularly the expansion of 5G. The deployment of faster and more reliable internet connections has become essential, particularly as urban centers adopt smart technologies to improve daily life. These developments align with Turkey’s broader goals of becoming a leader in digital innovation and reducing reliance on foreign telecom solutions.

Regional diversity also plays a critical role in the telecom market’s dynamics. Areas such as Marmara, Central Anatolia, and the Mediterranean are experiencing significant growth, driven by localized investments and tailored service offerings. Meanwhile, initiatives like the upcoming launch of Türksat 6A, the nation’s first domestically produced communication satellite, highlight Turkey’s commitment to advancing its telecommunications capabilities while reducing foreign dependency. These factors collectively position Turkey’s telecom sector as a key enabler of economic and technological progress in the region.

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