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Basic Business Taxes

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.

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.

Special exemptions:
General excise tax exemption is given to companies for gross proceeds from scientific contracts with the U.S. government.

Property tax:
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 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.

Counties offer some property tax abatement and fee exemption.

Foreign-trade zones program:
More than 33 years old, the Hawaii Foreign-Trade Zone Program is operating throughout the state at five sites and four subzones. Foreign-trade zones offer domestic and international businesses the opportunity to store, manufacture, or repair foreign source goods without payment of duties prior to re-export or entry into U.S. trade.

Overseas offices:
Hawaii has offices in Beijing and Taiwan to help expand markets for Hawaii products and services and to attract new investment and business. The state is represented by a general sales agent with responsibilities for Hong Kong and China. These offices are a good source of trade leads, market information, and referrals.