The Cayman Islands government has agreed to refund Doctors Hospital $300,000 in import duty it paid on medical equipment.
The decision was announced in the brief minutes of a Cabinet meeting held on 8 Aug., and released on Friday, 16 Aug.
While the minutes did not specify how much money was being refunded to the hospital or for what equipment, Doctors Hospital chairman of the board Dr. Yaron Rado confirmed the value to the Compass and said it was a duty refund on two major pieces of medical machinery the hospital imported in 2021.
“We are very thankful the government is giving us a tax abatement that we applied for in 2021, when we brought in the best CT scanner in the Caribbean, our 500-slice CT scanner, and a state-of-the-art MRI with deep learning, like AI, which gives you much better image quality,” Rado said.
Legal wrangling over import duty
It appears this is the first rebate given to the hospital since 2021, when it launched a legal challenge against the government’s ongoing arrangement of offering duty-free importation of medical equipment to Health City Cayman Islands. In an application for a judicial review at the time, Doctors Hospital argued that it should also be able to avail of such a waiver.
Under a contract signed in 2010 between Health City and the UDP government, Health City is entitled to import-duty waivers on the first US$800 million it spends on importing medical equipment. Once that was exhausted, it would receive reduced waivers over the following 30 years, according to the agreement.
The government subsequently agreed to grant similar concessions to Aster Caribbean Holdings Ltd. for a hospital it planned to build, though it appears that project will not be going ahead.
Doctors Hospital had argued at the time that giving such a wide-ranging and long-lasting waiver to other healthcare establishments was anti-competitive.
Rado told the Compass on Friday that he believed Doctors Hospital was “investing at least as heavily in healthcare in the Cayman Islands as Health City is”, adding that almost all of the profits are reinvested in the hospital, which now employs 45 doctors across many specialities.
Justice Richard Williams, in his ruling on the case in 2022, said the granting of the decades-long duty waivers to Health City was “inappropriate” and that subsequent governments were not bound indefinitely by an agreement made by a previous administration.
The lack of transparency regarding import duty waivers, often granted to developers as an incentive to invest in Cayman, was highlighted nearly a decade earlier in an auditor general’s report.
In September 2015, the then Auditor General Alastair Swarbrick issued a report on “poorly managed” revenue waivers, noting that there was “no checklist with established criteria and requirements against which revenue waiver applications were assessed for approval or rejection”. Swarbrick added that such a checklist would help ensure that applications were assessed “fairly and consistently”.
Williams, in his ruling on the Doctors Hospital judicial review in August 2022, pointed out that, in response to Swarbrick’s report, government had agreed to implement a concessions criteria by 31 Dec. 2016.
The judge said government “would be well advised and would be acting in a manner consistent with good governance if it did so, something it seems to have recognised since publicly stating in 2015 that it would draft and publish a policy”.
No policy on duty concessions has been released publicly by the government.
The issue was discussed at a Public Accounts Committee in May 2022, when Financial Secretary Kenneth Jefferson outlined repeated efforts to have a draft duty concessions policy finalised by politicians.
The Compass has reached out to the Ministry of Finance to ask if a concessions policy has been drawn up and whether government continues to grant duty waivers to Health City.
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