Hawaii Administrative Rules › Title 15 - DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT AND TOURISM › Department of Business, Economic Development and Tourism › Chapter 6 - ENTERPRISE ZONES › Subchapter 3 - DESIGNATION OF A BUSINESS AS A QUALIFIED BUSINESS; CERTIFICATION BY THE DEPARTMENT › Section 15-6-11 - State income tax credits and general excise tax exemption available to a business that has been certified

Current through June, 2024
(a) A business that
				  has been certified is entitled, subject to the apportionment provisions
				  discussed in these rules, to tax credits against any taxes due under chapter
				  235, HRS to the State according to the following formula:
First year of the seven-year cycle 80 per cent of tax
					 due
Second year of the seven-year cycle 70 per cent of tax
					 due
Third year of the seven-year cycle 60 per cent of tax
					 due
Fourth year of the seven-year cycle 50 per cent of tax
					 due
Fifth year of the seven-year cycle 40 per cent of tax
					 due
Sixth year of the seven-year cycle 30 per cent of tax
					 due
Seventh year of the seven-year cycle 20 per cent of tax
					 due
Eighth, ninth, and tenth years (extended three-year cycle)
					 20 per cent of tax due for qualified businesses engaged in the manufacturing of
					 tangible personal property or the producing or processing of agricultural
					 products.
The business shall be eligible for a credit against any
					 taxes due the State under chapter 235, HRS when the tax return required is
					 filed with the department of taxation, together with the certification by the
					 department. No unusable tax credit shall carry over or carry back or be
					 refunded.
(b) A business
				  that has been certified is entitled, subject to the apportionment provisions
				  discussed in these rules, to tax credits against any taxes due to the State
				  under chapter
				  235, HRS in an amount equal to a
				  percentage of unemployment insurance premiums paid on the payroll of all the
				  business' employees employed within enterprise zones located within the same
				  county, according to the following formula:
First year of the seven-year cycle 80 per cent of premiums
					 paid
Second year of the seven-year cycle 70 per cent of premiums
					 paid
Third year of the seven-year cycle 60 per cent of premiums
					 paid
Fourth year of the seven-year cycle 50 per cent of premiums
					 paid
Fifth year of the seven-year cycle 40 per cent of premiums
					 paid
Sixth year of the seven-year cycle 30 per cent of premiums
					 paid
Seventh year of the seven-year cycle 20 per cent of
					 premiums paid
Eighth, ninth, and tenth years (extended three-year cycle)
					 20 per cent of premiums paid for qualified businesses engaged in the
					 manufacturing of tangible personal property or the producing or processing of
					 agricultural products.
Tax credits provided for in this subsection apply only to
					 the amount of unemployment insurance premiums paid. Those premiums shall be
					 paid by the business and the business shall be eligible for a credit against
					 any taxes due
to
the State under chapter 235, HRS when
					 the annual tax return required is filed with the department of taxation,
					 together with the certification by the department.
No unusable tax credit may be carried over or carried back
					 to another tax period.
(c)
				  The tax credits allowed under subsections (a) and (b) may be combined by the
				  business. The department of taxation, however, shall not refund any unusable
				  credit. The application of this provision is illustrated in the following
				  example.
Example 1:
ABC Company's application to participate in the enterprise
					 zones program is approved by the department shortly after ABC commences a trade
					 or business in an eligible business activity in a zone. All of ABC's income is
					 derived from trade or business in an eligible business activity within the
					 zone. During the initial year of the seven-year cycle, ABC pays $500 in
					 unemployment insurance premiums for all employees. ABC's seven-year cycle
					 begins on January 1. After the initial year of the seven-year cycle, it is
					 determined that ABC owes $1,000 in net income taxes to the State under chapter
					 235, HRS. When ABC files its tax returns at the end of the initial year, it is
					 eligible for a tax credit equaling 80 per cent of the income taxes due, or
					 $800. ABC is also eligible for a credit of
80
per cent
					 of unemployment insurance premiums paid, or $400. Thus, ABC's total credits
					 under the program against income taxes are $1,200. As ABC's income tax
					 liability is $1,000, ABC tax credit is limited to $1,000 at the end of the
					 initial year if ABC is certified by the department even though the calculated
					 maximum credit is $1,200. The $200 of unusable credit, however, shall not be
					 refunded to ABC nor shall it be carried over or carried back to another tax
					 period.
(d) A business may
				  claim the exemption from the general excise tax on the gross receipts from all
				  transactions eligible under this chapter from the first of the month following
				  the date the department determines that the business is eligible to participate
				  in the program. The business, however, shall file the tax returns required
				  under chapter
				  237, HRS. The business shall submit
				  standard periodic tax returns as required under chapter 237, HRS, report the
				  gross income from the business, and [-] claim an exemption from the general
				  excise tax for trade or business in the zone. These returns shall be filed even
				  if no tax is due.
(e) Businesses
				  engaged in the manufacturing of tangible personal property or the producing or
				  processing of agricultural products are eligible to receive enterprise zone
				  benefits for an extended three-year cycle in addition to their seven-year
				  cycle.