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1992-04-30
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@083 CHAP ZZ
@CODE: HI
@CODE:NF
┌─────────────────────────────────────┐
│ GENERAL EXCISE TAX (HAWAII) │
└─────────────────────────────────────┘
Unlike most states, Hawaii does not have a general sales tax, as such.
Instead, it has a General Excise (or gross income) Tax (GET), which is
one of the most pervasive taxes levied by any state government in the
U.S. It is much like a general sales tax, except that it is in many
ways much broader than the typical sales tax, in that it applies to all
types of services, real estate rentals, and other types of income as
well as to the sale of tangible goods.
The GET is an excise tax for the privilege of engaging in business
within the state of Hawaii, and is based on the value of products,
gross proceeds of sales, or gross income. As such, it is applicable
to virtually all kinds of business income, but there are a number of
exemptions, including wages and salaries.
The tax, which applies at a uniform rate throughout the state, is gen-
erally imposed at a rate of 4%. As of 1993, counties may be permitted
to impose an additional 0.5% tax for mass transit funding, on
transactions subject to the 4% statewide general excise (or use) tax.
The GET tax rate is reduced to 0.5% on many transactions, such as
wholesale transactions made for resale (if the seller obtains a resale
certificate from a licensed retailer), intermediate services, manu-
facturing, producing, canning, and for certain other types of tax-
payers. A special tax rate of 0.15% applies to insurance solicitors'
income.
Businesses must register with the Dept. of Taxation on Form GEW-TA-3,
which is also used to obtain an employer's withholding number and a
transient accommodations tax number. A $20 fee must be paid to
register, and you must renew the license by January 31 each year.
A complementary "use tax" applies to certain transactions to which the
GET does not apply, such as on tangible property bought outside of
Hawaii and imported into the state. The use tax on such items is usu-
ally 4%, except that the lower 0.5% rate applies to items that are
imported for purposes of resale. Use tax exemptions include newspapers
and other periodicals, items imported for temporary use within the
state, and autos imported for personal use (if used first while a
resident of another state).
Not all gross receipts are subject to the GET or related use tax.
Exemptions to the GET include:
. Sales of land or securities;
. Wages, salaries;
. Various state excise taxes, such as Transient Accommodations
Tax (no tax on tax, except for GET itself);
. Sales of tangible personal property to the federal government;
. Income of banks or S & L's which are subject to the tax on
financial institutions (the franchise tax);
. Certains sales of tangible personal property that is shipped out
of the state;
. No tax on federal excise taxes collected on retail sales;
. No tax on certain "casual sales" outside the normal scope of
business.
. NEW 1991 LEGISLATION now allows hotel operators to reduce
taxable gross receipts by the amount disbursed for hotel
employees' salaries, wages, bonuses, retirement contributions
and other benefits.
Taxpayers subject to GET and use taxes are required to file monthly
returns on Form G-45. If your annual tax is less than $2,000, you may
file quarterly, and if less than $1,000, you may file semi-annual re-
turns. In any case, you must also file an annual reconciliation return
on Form G-49.
Finally, note that the GET is imposed on the seller, not on the con-
sumer, so you need not pass on the tax. In fact, if you do add the
4% tax to the price you charge the consumer, you must pay more GET on
the additional amount collected. Thus, on a $100 item, if you charge
the consumer $104 to cover the tax, you will owe tax of 4% times $104,
or $4.16 on the transaction, since you collected a total of $104. Some
retailers add 4.16% tax to their charges.