Category: Hawaii

Hawaii Credits and Incentives

As we’ve mentioned before, our Georgia clients frequently ask us to investigate potential credits and incentives in other states where they have operations, potential acquisitions or strong relationships with customers or vendors. In addition, private equity groups ask us about potential $$ for their portfolio companies.
We were recently asked about credits and incentives in Hawaii, and their state economic development professionals gave us some details (Hawaii incentives site click here).
For starters — Hawaii has similar corporate income tax rates but additional onerous excise taxes and very high personal income tax rates.  CNBC ranked Hawaii #49 in their 2017 America’s Top States for Business survey (Georgia was #2 in the same survey). 
Tax credits and incentives include:
MOTION PICTURE, DIGITAL MEDIA & FILM PRODUCTION INCOME TAX CREDIT – Based on Hawaii expenditures while producing a qualified film, television, commercial or digital media project.
ROYALTIES TAX EXEMPTION – Royalties derived from performing arts products are excluded from a Hawaii taxpayer’s income and not subject to state income tax.
HAWAII ENTERPRISE ZONES PARTNERSHIP – A joint state-county effort intended to stimulate-via tax and other incentives-certain types of business activity, job preservation and job creation in areas where they are most appropriate or most needed. Businesses can reduce state taxes and receive other county benefits for up to seven years by satisfying the EZ hiring and gross receipts requirements.
Foreign Trade Zone #9 -Duty-free treatment for items that are processed in FTZ and then re-exported. Duty payment is also deferred on items until they are brought out of the FTZ for sale in the U.S. market. It helps to offset customs advantages available to overseas producers who compete with domestic industry.
Compared to Georgia, Hawaii has:
  • Comparable corporate income tax rates, but not really, because they also collect additional General Excise Taxes
  • Much higher personal income tax rates
  • A far narrower range of incentives
  • Pre-approval required for all incentives
To summarize, Hawaii is one of the worst states for business.  But the weather is so nice you probably won’t care.  Aloha!