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 15-6-16 - Terms and conditions under which the tax credits and the general excise exemption may be claimed by a certified business

Current through June, 2024
(a) A
				  qualified business which has received certification from the department may
				  receive state tax credits and the general excise tax exemption for seven
				  consecutive taxable years. A qualified business engaged in the manufacturing of
				  tangible personal property or the
producing or processing of
				  agricultural products may
receive state tax credits and the
				  general excise tax exemption for an additional three consecutive taxable years.
Except as provided in the force majeure provisions in this
					 chapter, if a business fails to be certified for any taxable year during these
					 qualification periods, the business shall not be entitled to the income tax
					 credits or general excise tax exemption offered by this program. The business,
					 however, is eligible to qualify and be certified for any remaining taxable
					 years of its qualification
period.
(b) Except as provided in the force majeure
				  provisions in this chapter, any business which fails to be certified for one or
				  more taxable years during the cycle shall not be allowed to compensate by
				  requesting certification after completion of the original seven consecutive
				  year cycle or the additional three consecutive year cycle for businesses
				  engaged in the manufacturing of tangible personal property or the producing or
				  processing of agricultural products. The application of this provision is
				  illustrated in the following example:
Example 1:
ABC Company is certified to receive enterprise zone tax
					 benefits by the department in the initial year of the seven-year cycle. ABC
					 applies for and receives certification from the department in the next two
					 years. The department, however, denies ABC certification in year four. ABC
					 applies for and receives certification in years five, six, and seven. ABC
					 applies for certification in year eight. ABC will not receive certification
					 from the department in year eight as the term of the seven-year cycle has
					 expired.
(c) When a
				  taxpayer conducts business within two or more zones, only one return shall be
				  filed by the taxpayer with attached schedules supporting the amount of the
				  business tax credit or the exemption from the general excise tax.
(d) The department shall not provide
				  certification to a business which enters into a transaction where the principal
				  purpose of the transaction is evasion or avoidance of any taxes or unemployment
				  insurance premiums owed the State by securing the benefit of a credit or
				  exemption which the business would not otherwise enjoy.
(1) Where a business sells or delivers any
				  tangible personal property or service to or for an affiliated business or
				  person and the consideration paid by the affiliate to the business is not
				  indicative of economic substance or the true value of the property or services
				  delivered, this shall be prima facie evidence that the transaction was for the
				  principal purpose of evasion or avoidance of any taxes or unemployment
				  insurance premiums owed the State.