NEIL ABERCROMBIE

FREDERICK D. PABLO

GOVERNORDIRECTOR OF TAXATIONBRIAN SCHATZRANDOLF L. M. BALDEMORLT. GOVERNOR

DEPUTY DIRECTOR

STATE OF HAWAII

DEPARTMENT OF TAXATIONP.O. BOX 259
HONOLULU, HAWAII 96809

PHONE NO: (808) 587-1510
FAX NO: (808) 587-1560

September 23, 2011

DEPARTMENT OF TAXATION ANNOUNCEMENT NO. 2011-25
RE:General Excise Tax and Transient Accommodation Tax Exemptions for Foreign
Diplomats and Consular Officials

In November, Hawaii will host the Asia-Pacific Economic Cooperation (APEC) Summit.
It is anticipated that during this event a large number of foreign diplomats and consular officials
will be present, so the Department would like to remind vendors that gross receipts from sales
made to foreign diplomats or consular officials may be exempt from both General Excise Tax(GET) and Transient Accommodations Tax (TAT).
Section 237-24.3(11), Hawaii Revised Statutes (HRS), exempts from GET "amounts
received from foreign diplomats and consular officials who are holding cards issued orauthorized by the United States Department of State granting them an exemption from statetaxes."
Section 237D-3(8) states that the TAT shall not apply to "accommodations furnished toforeign diplomats and consular officials who are holding cards issued or authorized by theUnited States Department of State granting them an exemption from state taxes."
The United States Department of State (State Department) issues cards to missions1 anddiplomats granting them exemptions from state taxes to the extent the missions' and diplomats'home countries offer a similar exemption to U.S. missions and diplomats. The State Department
issues four types of cards. Each card prominently features the name and picture of the exempt
official. Also, each card bears one of four animal symbols which indicates the specific type oftax exemption the cardholder has been granted.
Cards bearing an owl symbol are used solely in connection with official purchases.2
Amounts received from these cardholders for sales ordinarily subject to GET or TAT are
exempt from such taxes if the purchase is made for official purposes.

1

A mission is a group of people from one state (i.e., sovereign country or nation) present in another state (in thiscase, the United States), for the purpose of representing that state in the receiving state. In other words, a mission isa foreign country's embassies and consuls, and the diplomats and consuls who work for them.

2Official purchases are those purchases made on behalf of the mission for which the diplomat or consul works.

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Page 2 of 5Cards bearing a buffalo symbol are also used solely in connection with officialpurchases. However, these cardholders are subject to some restrictions. For example, acard bearing a buffalo symbol may indicate that its cardholder is not exempt from hoteltax.3 A different cardholder's buffalo card may indicate it does not exempt the cardholder
from purchases of clothing or purchases from restaurants. Amounts received from thesecardholders for sales ordinarily subject to GET or TAT are exempt from such taxes if (1)the purchase is made for official purposes and (2) the card does not indicate that it
specifically does not apply to the purchase in question.
Cards bearing an eagle symbol are used solely in connection with personal purchases.
Amounts received from these cardholders for sales ordinarily subject to GET or TAT are
exempt from such taxes if the purchase is made for personal purposes.
Cards bearing a deer symbol are also used solely in connection with personal purchases.
However, these cardholders are subject to some restrictions. For example, a card bearing
a deer symbol may indicate that its cardholder is only exempt on purchases over $300.
Amounts received from these cardholders for sales ordinarily subject to GET or TAT are
exempt from such taxes if (1) the purchase is made for personal purposes and (2) the carddoes not indicate that it specifically does not apply to the purchase in question.
More information on these cards, including what the cards look like, can be found on
page four, and can also be found online at www.state.gov/documents/organization/165505.pdf.
The validity of a card can be verified online at https://ofmapps.state.gov/tecv or bycontacting the State Department Office of Foreign Missions by telephone at (202) 895-3500, x2.
Vendors are exempt only from GET and TAT on amounts received from diplomats andconsuls. All other taxes apply, including rental motor vehicle surcharge tax, regardless of what isstated on the diplomat's or consul's card. Taxes on telecommunications, other utilities, gasoline
purchases, as well as the rental motor vehicle surcharge tax, are not exempted by United States
Department-issued cards but may be exempted by other means which are described atwww.state.gov/ofm/tax.
These exemptions apply only to amounts received from the cardholder him or herself.
The cardholder may not give his or her card to another person to use. Please be sure to check thatthe picture on the card matches the person who presents it to you. However, cardholders may
make purchases for others (e.g., a diplomat may treat a guest to a meal at a restaurant, orpurchase a hotel room for a friend), and the amounts received for those purchases are exempt. If
the cardholder is the one making the purchase, and the purchase is exempt according to his card,
the gross receipts are exempt regardless of who actually consumes the service or item purchased.

3

In such a case, the hotel which furnished the room to the consul or diplomat would still owe TAT on the grossrental receipts it received.

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Any business claiming an exemption under Section 237-24.3(11) or 237D-3(8) must havedocuments to support the exemption. The business may photocopy the tax exemption card (bothsides if the exemption information is on the back of the card) and retain it with its records.
Alternatively, the business may record the buyer's name, mission (country), card number,expiration date, and level of exemption.
Example 1: A consular official purchases office supplies and books twenty hotel rooms
for a visiting official delegation. The consular official presents a tax exemption card bearing anowl symbol and pays for the supplies and hotel rooms with a mission credit card. The seller ofthe supplies and the hotel operator photocopies both sides of the tax exemption card. The grossincome received from the sale of supplies is exempt from the GET. The gross income received
by the hotel for furnishing the twenty rooms is exempt from the GET and TAT.
Example 2: A foreign diplomat purchases a meal at a restaurant for himself and severalof his guests. The diplomat presents a tax exemption card bearing an eagle symbol. A restaurant
employee records the diplomat's name, mission, card number, expiration date, and level ofexemption. The gross income received from this meal is exempt from the GET. Note that thegross proceeds for the entire meal are exempt, even though the diplomat's guests are notthemselves exempt cardholders. The key fact is whether the person paying for the meal is an
exempt cardholder, not who specifically consumes the meals.
Example 3: A foreign diplomat books a hotel room. The diplomat presents a cardbearing a deer symbol which clearly states: "NOT VALID AT HOTELS." The gross income
received by the hotel for furnishing this room is subject to both GET and TAT.
Example 4: A consular official books a bus from a vehicle rental company for purposesof transporting consular officials during an international economic summit. The official presents
a tax exemption card bearing an owl symbol and pays for the bus rental with a mission creditcard. The vehicle rental company photocopies both sides of the tax exemption card. The grossincome received by the vehicle rental company is exempt from the GET. However, the vehicle
rental company must still pay the Rental Motor Vehicle and Tour Vehicle Surcharge Tax foreach day the bus is rented to the consular official.
Example 5: A foreign diplomat purchases a tour package which includes a catamaran
cruise, admission to a luau, and an extravaganza. The foreign diplomat presents the tourpackager with a tax exemption card bearing an eagle symbol. The tour packager photocopies
both sides of the tax exemption card. The tour packager then provides copies of the photocopied
tax exemption card to each tourism-related service provider providing a service that is part of thetour package sold to the foreign diplomat (i.e., the catamaran ride provider, the luau provider andthe extravaganza provider). The tour packager and all three tourism-related service providers are
exempt from GET on their respective portions of the proceeds from the sale of the tour package
to the foreign diplomat.

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For more information related to this Announcement, please contact the Rules Office at
808-587-1577.

FREDERICK D. PABLO
Director of Taxation