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 15-6-12 - Calculation of eligibility for tax credits and exemption; apportionment

Current through June, 2024
(a) This section sets forth the calculations
				  that a business may have to complete to determine its eligibility for business
				  tax credits and the general excise exemption and the apportionment of the
				  credits and the exemption.
(b)
				  During each taxable year, at least 50 per cent of the business' enterprise zone
				  establishments ' gross receipts must be attributable to the active conduct of a
				  trade or business in an eligible business activity within enterprise zones
				  located within the same county.
(c) A business which has income taxable both
				  within and without the State shall apportion and allocate the business' net
				  income under sections
				  235-21 to
				  235-38,
				  HRS, prior to calculating the enterprise zone tax credits.
(d) The general excise tax exemption and the
				  enterprise zone tax credits shall apply only to the extent that a qualified
				  business conducts trade or business in an eligible business activity within
				  enterprise zones located within the same county.
(1) The business may claim an exemption from
				  the general excise tax at the time of the filing of the periodic returns
				  required under chapter 237, HRS, only for trade or business within enterprise
				  zones located within the same county.
(2) A business may claim an enterprise zone
				  credit against any taxes due the State. Subject to the allocation and
				  apportionment, if any, under subsection (c), a business with income from
				  business activity which is taxable both within and without an enterprise zone,
				  shall allocate and apportion the income, pursuant to this section, and apply
				  for an enterprise zone tax credit at the end of each taxable year only for the
				  income derived from the qualified business activities of the trade or business
				  within enterprise zones located within the same county The business shall
				  multiply the income by a fraction The numerator of the fraction is the total
				  gross receipts of the qualified business activity conducted by the qualified
				  business in an eligible business activity within enterprise zones located
				  within the same county during the taxable year The denominator is the total
				  gross receipts of the qualified business within the State during the taxable
				  year, including sales within and without the enterprise zone.
(A) For purposes of allocation and section, a
				  business' income is earned apportionment of income under this outside of an
				  enterprise zone if the:
(i) Income is from
				  business activity within the zone which does not fall within the definition of
				  eligible business activity; or
(ii)
				  Income is from business activity conducted outside the zone. This term includes
				  work that a business located within a zone subcontracts to a business located
				  outside the zone and the work is delivered outside the zone.
(3) A business may
				  claim an enterprise zone credit against any taxes due 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. Where the business has employees both
				  within and without the enterprise zone, the business shall allocate and
				  apportion the unemployment insurance premiums by multiplying the unemployment
				  insurance premiums paid by a fraction. The numerator of the fraction is the
				  payroll for employees employed within enterprise zones located within the same
				  county during the taxable year, and the denominator is the payroll for all
				  employees within the State.
(A) An employee
				  is employed within the zone if:
(i) The
				  individual's service is performed entirely within the zone; or
(ii) The individual's service is performed
				  both within and without the zone, but the service performed without the zone is
				  incidental to the individual's service within the zone.