If you’re headed to a cruise in the Bahamas, it might be a good idea to pay now for that excursion to their private island. Prices are likely to go up after March 1, when the Bahamas begins charging a new 10% Value Added Tax (VAT).
The Bahamian government will be adding the VAT to all purchases of goods and services at any private island operated by a cruise line—including food and beverages, recreational activities, equipment rentals, spa services, cabana rentals and shore excursions bought on islands including Royal Caribbean’s Perfect Day at CocoCay, Disney Cruise Line’s Castaway Cay, MSC’s Ocean Cay, Norwegian’s Great Stirrup Cay or the new Carnival Half Moon Cay.
The proposal ends a nine-year VAT exemption for the private islands. Normally retailers in the Bahamas charge a 12% VAT on all goods and services.
Announcing the change, Bahamas’ Financial Secretary Simon Wilson told local news that “originally, we were under the impression given to us by the cruise lines that any commercial activity on the private islands was an extension of the package purchased [by passengers] on ship—they were indistinguishable. That’s not the case. The private islands are much bigger, much more diverse in their operations, and they actually compete with Bahamas-based businesses for onshore excursions.”
While the cruise industry has until February 16 to provide feedback on the VAT changes, Wilson said he expects the tax to take effect as planned on March 1.
Visitors to the Bahamas can get refunds for VATs they pay on purchases of more than $100. But they must shop at designated retailers, request a VAT refund form at the point of sale, complete the form, and present it to a Customs officer when they leave the country.
The Bahamas last year increased its cruise passenger tax 27%, from $18 to $23, for ships stopping at Nassau and Freeport, and to $25 for those going to private islands, and also added a $7 per person tourism tax. Meanwhile, the US State Department issued a travel advisory cautioning travelers about violence ashore, after 18 people were murdered so far this year. And yet, CocoCay is the number-one preferred destination for Royal Caribbean guests.
