The Bahamas plans a tax compliance crackdown on cruise lines’ private island operations. Prime Minister Philip Davis, unveiling the 2025-2026 Budget, said the cruise industry’s tax revenue contribution “has not kept pace” with the Bahamas’ cruise passenger growth.
Last year, cruise passenger volumes were up 20% to 9.4 million and cruise tourism accounts for a huge 83.4% of total tourist arrivals.
The government has held tax compliance talks with cruise lines to ensure “fairness and equity” across the tourism industry.
Prime Minister Targets Private Islands to Boost VAT Revenues
The discussions have focused on implementing VAT on all imports to cruise lines’ private island destinations; VAT on “all services offered for value” to guests and more stringent customs duty enforcement.
“Cruise tourism in The Bahamas has come a long way. What began as a modest stream has now become an economic powerhouse. But while cruise volumes have soared, the sector’s direct contribution to government revenue has not kept pace,” the PM said.
“We’ve seen exponential growth in private cruise destinations, where premium onshore activities like cabana rentals are as much as $4,000 per day, yet these earnings often flow offshore with limited benefit to the Bahamian taxpayer”.
The move comes as the number of private destinations is set to increase this year with Carnival’s Celebration Key and Royal Caribbean’s Royal Beach Club.
“Our Budget introduces targeted compliance measures to ensure cruise-related activities contribute fairly and meaningfully to our national development,” Davis added.
“We expect that the economic activity on the private cruise destinations will be the biggest driver of GDP growth in the next three to five years.”
Davis added that cruise lines have “acknowledged the importance of compliance” and will continue discussions on its implementation in a “sustainable manner.”
