Bahamas To Enforce Tax Hike On Cruise Lines Amid Over Nine Million Visitor Surge

The Bahamas is set to introduce a sweeping range of tourism-focused tax reforms targeting cruise lines that operate private islands within its borders, aiming to boost national revenue and ensure fair contributions from the booming cruise sector. With a record 9.4 million cruise passengers arriving in 2024—accounting for over 83% of total tourist arrivals—the government argues that current tax structures have not kept pace with the industry’s growth. These changes will include new taxes on imported goods, services provided to guests, and foreign labor used at these exclusive destinations, as well as tighter enforcement of existing duties. The move reflects growing concerns that while cruise tourism continues to thrive, much of the economic benefit bypasses local communities and public coffers.

Bahamas to Tighten Tax Oversight on Cruise Lines Operating Private Islands Amid Record Visitor Growth

As cruise tourism surges to unprecedented levels, the Bahamian government is rolling out a series of robust tax compliance measures targeting cruise operators that manage private island destinations in the country. This bold fiscal move aims to better align cruise lines’ contributions with their expanding presence and the infrastructure they rely on in The Bahamas.

In a landmark year for The Bahamas, cruise tourism soared to unprecedented levels in 2024, with 9.4 million passengers arriving by sea—an impressive 20.3% increase over the previous year. These travelers made up a staggering 83.4% of all visitors, underscoring the cruise industry’s dominant role in shaping the nation’s tourism landscape. Despite this overwhelming influx, government leaders say the financial input from cruise lines—especially those managing exclusive private island destinations—has not matched their expanding operations or the heavy use of national resources, prompting renewed calls for greater economic accountability.

A Revenue Gap the Government Aims to Close

Prime Minister Philip Davis has expressed concerns that the financial returns from cruise companies remain disproportionately low when measured against their impact on local resources and infrastructure. As a result, government representatives are initiating negotiations with cruise operators to revisit existing agreements and introduce new compliance obligations.

The government is specifically aiming to tax:

• All imported goods destined for private island resorts,
• Services provided to cruise passengers on those islands,
• Water-based recreational activities, which it proposes to reserve for Bahamian operators,
• Customs duty enforcement on incoming materials,
• Work permit fees for foreign staff employed at private island facilities.

However, these changes cannot be unilaterally imposed. Due to existing contractual agreements between The Bahamas and the cruise lines, any amendments must be mutually agreed upon—posing a potential challenge for rapid enforcement.

Expansion of Cruise Destinations Raises Stakes

Several major cruise companies have developed or are in the process of developing high-profile private destinations within The Bahamas, which are now under increasing regulatory focus. These private islands are purpose-built to offer a self-contained paradise, often minimizing passengers’ interaction with the broader Bahamian economy.

Royal Caribbean’s Perfect Day at CocoCay, situated in the Berry Islands, stands out as a premier example. With its elaborate waterpark, helium balloon rides, exclusive beach clubs, and other upscale attractions, the island drew over 3 million guests in 2024, making it one of the busiest cruise destinations in the Caribbean.

Nearby, Norwegian Cruise Line’s Great Stirrup Cay—a 250-acre tropical playground—caters to thrill-seekers with zip lines, snorkeling adventures, and beach bars. The island draws roughly 400,000 visitors annually and is currently undergoing a $150 million multi-ship pier expansion, further signaling its long-term importance.

Carnival Corporation manages the idyllic Half Moon Cay, nestled on Little San Salvador Island and co-hosted by both Carnival Cruise Line and Holland America Line. Celebrated for its untouched natural beauty, soft white sands, and calm turquoise waters, this private island escape has earned a loyal following among cruisers looking for a quiet retreat packed with leisurely aquatic experiences and a laid-back island vibe.

Princess Cruises, another Carnival subsidiary, operates Princess Cays on the southern end of Eleuthera. The destination offers a mix of aquatic fun and cultural immersion through local craft markets and community partnerships.

Disney Cruise Line has redefined family cruising with its exclusive island retreat, Castaway Cay, situated off the coast of Great Abaco and beloved for its immersive, kid-friendly atmosphere. In 2024, the company broadened its presence in The Bahamas by unveiling Disney Lookout Cay at Lighthouse Point on Eleuthera—a vibrant coastal escape designed to celebrate Bahamian heritage through art, architecture, and locally inspired experiences. Blending cultural authenticity with Disney’s signature charm, the new destination offers guests a one-of-a-kind journey where island traditions meet magical storytelling.

MSC Cruises, meanwhile, has taken a conservation-first approach with Ocean Cay MSC Marine Reserve in the Bimini chain. It recently unveiled a coral reef restoration center, reinforcing its commitment to marine sustainability and eco-tourism—a contrast to the theme-park style experiences of some competitors.

The arrival of Carnival’s new Celebration Key on Grand Bahama Island is also a game-changer. Slated for a grand opening in July 2025, the $600 million facility is expected to accommodate up to 2 million visitors annually. Likewise, Royal Caribbean’s $110 million Paradise Island Beach Club, scheduled to open in December 2025, is anticipated to draw thousands more.

Implications for Cruise Lines and Local Communities

The government’s renewed scrutiny signals a strategic pivot—moving from passive facilitation to active oversight of foreign-owned cruise infrastructure. With such massive visitor volumes, local stakeholders argue that these private islands should no longer operate in a semi-autonomous way, reaping benefits while sidestepping proportional responsibilities to the host nation.

Key concerns include limited direct economic interaction between cruise visitors and Bahamian communities, especially when passengers are transported directly to fenced-in private enclaves where all services are managed and monetized by the cruise line itself. This model, critics argue, limits economic opportunities for local vendors, tour guides, and small businesses.

By imposing taxes on imported goods, enforcing duties, and mandating that watercraft operations be reserved for Bahamians, the government hopes to redirect more cruise-derived revenue into the domestic economy. Additionally, requiring work permit fees for expatriates would ensure that foreign labor also contributes fairly to national revenue.

A New Chapter for Cruise-Tourism Relations

This evolving regulatory framework reflects broader global trends. Coastal nations are increasingly reassessing their agreements with cruise companies, seeking greater equity and sustainable partnerships. For The Bahamas, which relies heavily on tourism for economic vitality, the challenge lies in balancing its welcome to millions of cruise passengers with the need to protect local interests, labor, and environmental resources.

The discussions now underway between the Bahamian government and the cruise lines could set a precedent for how other island nations negotiate fairer terms. While cruise operators may be hesitant to accept increased taxation, the stakes are high—not only in terms of fiscal return but also in preserving the long-term value of The Bahamas as a premium destination.