Hawaii Basic Business Taxes 2010
Hawaii's economic development, finance and tax organizations provide a range of incentive programs to initiate new business and commercial investment. Specific programs include energy and fuel conservation measures, special exemptions, and the Hawaii Enterprise Zone Program.
Area Development Research Desk (Feb/Mar 10)
Corporate income tax:
The corporate tax rate is 4.4 percent of income up to $25,000; 5.4 percent of income up to $100,000; and 6.4 percent of income exceeding $100,000. The capital gains tax rate is 4 percent on net capital gain for corporations.
General excise and use taxes:
Manufacturers, processors, millers, refiners, packers, and canners are taxed 0.5 percent of product value; retailers are taxed 4 percent of gross proceeds; wholesalers, in general, are taxed 0.5 percent of gross proceeds; contractors are taxed 4 percent of gross proceeds; and services are taxed 4 percent of gross income. Products and services exported out of state are exempt from the general excise tax. Effective January 1, 2007, activities with a business purpose on the island of Oahu which are subject to the 4 percent GET rate are also subject to an additional 0.5 percent tax for the City and County of Honolulu's mass transit system.
Purchase of depreciable, tangible equipment is provided a refundable income tax credit equal to the general excise or use tax paid on the purchase.
Manufacturers operating within activated foreign-trade zone sites may be exempt from the general excise tax and are exempt from use taxes.
A use tax is imposed on the value of goods and services imported from outside Hawaii for use in Hawaii. The tax is 0.5 percent or 4 percent depending on how the importer "uses" the imported goods and services (e.g., resells; is the consumer).
Energy and fuel conservation measures:
Varying credits can be claimed against the corporate or individual income tax for solar, wind, or photovoltaic energy devices, or heat pumps.
General excise tax exemption is given to companies for gross proceeds from scientific contracts with the U.S. government.
Counties impose tax on all real property, buildings, and improvements to property. Property is assessed at 100 percent of fair market value, and taxes vary from 0.6 percent to 1 percent, depending upon type of property.
Hawaii Enterprise Zone Program:
Each of the state's four counties may designate as many as six zones. Businesses in a zone that provides telecommunications services, medical research, biotechnology research, environmental remediation technician training, wind energy production, data-systems services, or international business training, or are in manufacturing, wholesaling, or aviation or maritime maintenance and meet the employment and sales criteria are eligible for the following state incentives:
• Seven-year exemption from general excise taxes for eligible businesses located in the enterprise zone, and a general excise tax exemption to a licensed contractor on revenue received for construction work done for an enrolled business in a zone;
• 80 percent income tax credit the first year, decreasing 10 percent each year for the next six years;
• Income tax credit equal to 80 percent of unemployment taxes paid during the first year, decreasing 10 percent each year for the next six years.
Some counties offer additional incentives such as real property tax exemption, building permit fee waivers, grading permit fee waivers and business permit fee waivers.
Immigrant Investor Program -- Hawaii Regional Center (HRC):
In accordance with the immigrant-investor provisions of the U.S. Immigration Act of 1990, the Department of Business, Economic Development & Tourism (DBEDT) has specified areas of high unemployment and rural areas where an investment of $500,000 and creation of 10 new jobs are sufficient to qualify for a U.S. permanent resident visa (Green Card). The targeted employment areas include all neighbor islands and several portions of Oahu.
The foreign-trade zone (FTZ9) is a one-stop international trade center for importers and exporters. FTZ9 has been assisting businesses for over 40 years by providing complete warehousing services, office space, logistical solutions and trade compliance services. Located at the FTZ9 is an array of local shipping agents and customs brokers that provide essential services for importers and exporters. The seven-acre facility is conveniently located in downtown Honolulu at Pier 2 and offers over 500,000 cubic feet of ultra secure storage space and 25,000 square feet of
office space. FTZ9 is considered outside of U.S. Customs territory. This allows unique cost savings for companies looking to store their foreign goods.
Hawaii has offices in Beijing and Taiwan to help expand markets for Hawaii products and services and to attract new investment and business. These offices are a good source of trade leads and market information.
Hawaii State Contact Information:
State of Hawaii
Department of Business, Economic Development and Tourism
State of Hawaii
P.O. Box 2359
Honolulu, HI 96804
Fax: (808) 586-2427
Incentive and tax information is provided to Area Development by each state's economic development or commerce agency for information purposes only and is subject to revision at any time by the state government. Please contact the state agency directly for full requirements and offerings.