Trump Plans Tax Crackdown on US-Based Cruise Operators Over Offshore Registration

Last Updated on February 25, 2025 by Mrunal & Jiten

Saturday, February 22, 2025
Newly confirmed US Commerce Secretary Howard Lutnick has announced that President Donald Trump will push for a crackdown on cruise operators registered offshore but headquartered in the United States.
Speaking on a media, Lutnick claimed that major cruise lines, including Royal Caribbean, Norwegian Cruise Line (NCL), and Carnival Corporation, avoid paying taxes in the US by registering their ships in foreign countries with lenient tax laws.

Cruise Lines and Offshore Registration

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Despite being headquartered in Miami, Florida, the top three US-based cruise lines incorporate their ships offshore:

Royal Caribbean – Incorporated in Liberia
Norwegian Cruise Line (NCL) – Incorporated in Bermuda
Carnival Corporation – Incorporated in Panama

Under current regulations outlined by the US Internal Revenue Service (IRS), foreign-flagged cruise ships operating in international waters are generally exempt from US corporate income tax, provided they do not generate revenue primarily from US domestic routes.

Lutnick: “This Is Going to End”

During his interview, Lutnick challenged the industry’s tax structure:
“You ever see a cruise ship with an American flag on the back? They have flags of like Liberia or Panama. None of them pay taxes. This is going to end under Donald Trump, and those taxes are going to be paid. Americans’ tax rates are going to come down.”
His remarks led to an immediate stock decline for Royal Caribbean, Norwegian Cruise Line, and Carnival Corporation.

Cruise Industry Responds

The Cruise Lines International Association (CLIA) quickly countered Lutnick’s claims, stating:
“Cruise lines pay substantial taxes and fees in the US—nearly $2.5 billion annually, accounting for 65% of their global tax payments, despite only a small portion of their operations occurring in US waters. Foreign-flagged ships visiting the US are treated the same as US-flagged ships visiting foreign ports, ensuring consistent international taxation.”
According to data from the US Maritime Administration (MARAD), cruise lines contribute significantly to the US economy through port fees, tourism revenue, and employment, despite their offshore registrations.

Legal & Economic Implications

The Jones Act (1920), enforced by the US Department of Transportation, requires that passenger vessels operating between US ports be built, owned, and crewed by Americans—which is why most cruise lines register their ships overseas.
Any policy changes could increase operating costs, potentially affecting pricing and job markets within the industry.
With Trump’s renewed focus on US-based corporate tax policies, the cruise industry may soon face new financial obligations. However, changes to taxation laws could require Congressional approval, making the timeline for enforcement uncertain.
As the 2024 election cycle unfolds, the future of cruise line taxation remains a hot-button issue in Trump’s economic policy.