Do Foreign-flagged Cruise Ships Pay U.S. Taxes?

Do Cruise Ships Pay US Taxes?

The short answer is yes, but there’s a bit more to it. Provisions under the U.S. Internal Revenue Code allow foreign corporations — like cruise lines — to do business in America without being taxed federally, as long as they are registered in countries that have reciprocal agreements with the U.S.

Cruise ships fly foreign flags in order to benefit from laws and regulations in other countries. Flying a foreign flag affects employment, taxes, and many other regulations that may be favorable for the cruise line.

The three biggest cruise lines are incorporated in what are called equivalent exemption countries where they are not required to pay the 21 percent corporate income tax that U.S. companies are obligated to pay.

Do US Laws Apply on Cruise Ships?

International maritime law requires that cruise ships take every possible measure to provide safe passage. But when something goes wrong, jurisdiction is difficult to sort out. So when a ship is docked at the Port of Miami, all U.S. (and Florida) laws apply to the ship, its passengers, and its crew.

The ship’s flag state, the location of the ship, and the nationality of the victim and perpetrator can all play a role in determining which laws apply.

Major Cruise Lines

Carnival Corp, Royal Caribbean Cruises, and Norwegian Cruise Line Holdings are the three dominant players in the cruise industry.

Additional Information:

  • New hires that are not US citizens, US Permanent Residents, or Canadian will need to obtain a C1/D visa.
  • Cruise ships are responsible for taking reasonable precautions to protect passengers while on board.
  • Specific laws that apply to cruises include the Cruise Vessel Security and Safety Act of 2010.
  • For cruise ships registered in the UK, the MCA (Maritime and Coastguard Agency) is the flag state control executive agency responsible for the implementation of the GB’s and the International maritime law and policies.

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