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 15-6-13 - Wholesale sale of tangible personal property

Current through June, 2024
(a) Tangible
				  personal property must be sold at wholesale by an establishment or qualified
				  business located within an enterprise zone. The
transfer of title to the buyer of the tangible personal
					 property must take place in an enterprise zone located within the same county
					 in which the tangible personal property is sold.
(b) When title passes is dependent upon the
				  factual circumstances of the transaction gathered from the contract of sale and
				  invoice. Among the circumstances that are considered in making this
				  determination are when the risk of loss transferred from the seller to the
				  purchaser, where delivery occurs, and when title to the property sold passed
				  from the seller to the purchaser under the provisions of the uniform commercial
				  code, chapter
				  490, HRS. A statement in a contract
				  that title passes at a certain time or event will not in itself create a
				  presumption of passing of title for purposes of this section, unless title has
				  in fact passed considering all of the facts and circumstances.
(c) The application of this section is
				  illustrated in the following examples:
Example 1:
ABC Company is located in an area designated as an
					 enterprise zone. ABC is a wholesaler of electronic parts and equipment. The
					 purchasers take title and receive delivery of the parts and equipment in the
					 zone. Accordingly, ABC will qualify for tax credits against any taxes due the
					 State and the general excise tax exemption.
Example 2:
ABC Seafood Company is located in an area designated as an
					 enterprise zone. ABC sells the seafood at wholesale to purchasers who take
					 title to the seafood within the zone and receive delivery of the seafood within
					 the zone. ABC also sells the seafood at retail to customers who come to ABC's
					 place of business. The wholesale sales will qualify for the income tax credits
					 and general excise tax exemption. The retail sales to customers, however, will
					 not qualify. Accordingly, ABC will have to allocate the income received from
					 each type of sale and claim income tax credits and the general excise tax
					 exemption only for wholesale sales.
Example 3:
ABC Ranch is located in an area designated as an enterprise
					 zone. ABC raises cattle and various food crops. ABC sells the cattle and crops
					 at wholesale to purchasers who receive title and delivery within the zone. ABC
					 will qualify for the tax credits and general excise exemption.
Example 4:
Assume the same facts as in Example 3, except that ABC also
					 sells cattle and crops to purchasers who receive possession of the cattle and
					 crops in an enterprise zone outside of the county that ABC is located in. The
					 contract provides that title passes to the purchaser upon execution of the
					 contract but also provides that ABC must bear the cost of delivery and any risk
					 of loss. Under applicable law, title is deemed not to pass to the purchaser and
					 ABC will have to apportion the income received from the sales outside the
					 county that ABC is located in and claim income tax credits and the general
					 excise tax exemption only for sales where the purchasers receive title within
					 an enterprise zone located within the same county in which the cattle and crops
					 are sold.