Openly gay people can be barred from entering Tobago under the island's immigration law, and homosexuality is illegal in other parts of the Caribbean.
However, promoters of the festival insist Elton will close the event on April 29.
Festival organiser Anthony Maharaj said: "Elton John is coming as what he is, one of the world greatest performers.
He has performed in every country around the world. In Christian countries there has never been an objection. He is not coming here to preach about what lifestyle people should have.
This country should be honoured to have Sir Elton John perform in Tobago." Elton has declined to comment.
Diana Ross, Mary J.
Blige and Gladys Knight are also due to perform at the three-day event.
Last year, Elton said religion should be banned because it "promotes the hatred and spite against gays" and turns people into "hateful lemmings".
