Hawaii: The Aloha State

The state of Hawaii is made up of over 130 islands and atolls in the Pacific Ocean and is more than 3,500 kilometers from the southwest US West Coast. The area of ​​the Aloha State is almost 28,000 km², of which only 16,500 km² is land area. According to ehuacom, Hawaii has almost 1.5 million inhabitants and has Honolulu as its capital.

Hawaii Location Map

HELLO HAWAII

Hawaii welcomes companies looking to expand or establish themselves there and offers generous incentives for locating on the islands. In addition to the high quality of life, the multicultural environment, the entrepreneurial and innovative ecosystem and a favorable tax climate, the Aloha State convinces with business-friendly initiatives and provides resources from the Ministry of Economic Development and Tourism.

Hawaii’s strong entrepreneurial community means newcomers will find a support system of like-minded people dedicated to the growth and success of businesses. The state is home to award-winning innovators, modern coworking spaces and programs for growing businesses. Hawaii is making great strides in renewable technologies and specialty agriculture. In addition, the archipelago has developed into an important center for Asia-Pacific affairs.

Hawaii tax incentives include property tax exemption, tax exemption on goods manufactured for sale outside of Hawaii, and tax exemption on stock transfers.

TOURISM OUTSHINES EVERYTHING

Tourism has been Hawaii’s largest industry since it gained statehood in 1959. It accounts for about a fifth of gross national product and brings in over $16 billion annually. Tourism creates more than 200,000 jobs in Hawaii and generates nearly $2 billion in taxes. The state government has already made major efforts to diversify and reduce dependency.

Other core sectors of the economy are the service sector, fisheries, education, agriculture and defense. The United States military is an important part of the Hawaiian economy. The Department of Defense invests around 13 billion annually in this state. This makes it Hawaii’s second largest industry. The islands are one of the few states home to the Air Force, Army, National Guard, Marines and Coast Guard. Hawaii is also home to the US Pacific Command. All of these facilities create jobs and contracts for local businesses. In addition to the civilian workforce, there are around 64,000 active duty soldiers spread across the islands. The contractors receive military investments in ship repair,

FDIS – HERE TO STAY

Hawaii not only has a strong attraction for tourists, but also attracts global companies. Almost 300 international companies have branches in the Aloha State and thereby enrich the local economy. Together they employ nearly 40,000 Hawaiians. Less than ten percent of the jobs created are in the manufacturing sector. Normally this percentage is significantly higher, which underlines the specialness of Hawaii. The close ties between Japan and Hawaii are also evident in FDIs. The companies from the Asian island nation invest the most compared to those from other nations and they are also responsible for most of the jobs created.

INCOME TAX IN HAWAII

Hawaii charges an income tax of 1.4 – 11% depending on income. In addition, federal income taxes are payable.

CORPORATION TAX IN HAWAII

Hawaii charges a 6.4% corporate income tax. In addition, federal corporation tax is payable.

SALES TAX IN HAWAII

There is no sales tax or Value Added Tax (VAT) in the USA based on the European model. Instead, in the United States, states, counties, and municipalities levy a local sales tax on the sale of products (but not services).

Sales Tax Rate in Hawaii

The sales tax in Hawaii is 4% at the state level. Municipalities or districts charge an average of 0.44% sales tax. Combined, an average of 4.44% is due.

Hawaii Nexus Laws & Sales Tax

Learn more about the Economic Nexus Laws in the context of Sales Tax here.

Effective Date

July 1, 2018

Transactions included:

Gross income or gross proceeds from tangible personal property, intangible property, or services supplied or consumed in the United States state

Treatment of tax-exempt transactions:

Exempt Sales and Exempt Services are included in the threshold

Reason:

turnover or transaction volume

Sales/Transactions Threshold:

$100,000 or 200 transactions

Evaluation period:

The threshold applies to the current or immediately preceding calendar year. Applies to tax years beginning on January 1, 2018.

Extra information:

  • Registration Requirements: Hawaii requires a remote entity to register its first periodic return by the periodic return deadline after the period in which it has exceeded the Economic Nexus Threshold. See the Department of Taxation 18-10 announcement for more information.
  • Announcement by the Department of Taxation
  • HI SB2514

Hawaii Marketplace Sellers & Sales Tax

Learn more about Marketplace seller registration requirements

Effective date by the marketplace broker:

January 1, 2020

Economic Nexus Threshold:

At least 200 transactions or $100,000 in gross income from Hawaiian sales in the US state in the current or previous calendar year. When calculating the threshold:

  • Marketplace intermediaries should include direct and third-party sales in their thresholds
  • Remote sellers should exclude sales through a marketplace unless:
    • Sales of tangible personal property made through a marketplace but shipped into the state by the marketplace seller, and
    • Sales of intangible personal property and services in the US state that are ultimately used or consumed in the state, whether the sales are direct or through an agent.

Registration requirements:

  • Remote Multichannel Sellers: You must register with the Hawaii Department of Taxation (DOTAX) and collect Hawaii General Excise Tax (GET) on sales not taxed by a Marketplace Agent once you have crossed the Economic Nexus Threshold.
  • Remote Marketplace Sellers: You must register with DOTAX as soon as you cross the Economic Nexus Threshold, even if you only sell through one or two collectible marketplaces. Contact DOTAX for more information.
  • In-State Multichannel Sellers: You must register and collect Hawaii GET for sales that are not taxed by a marketplace intermediary.
  • State Marketplace Sellers: You must register. Contact DOTAX for more information.
  • Please note that in some situations, marketplace sellers may be held liable for GET. Learn more about it hereand here.