Hawaii means business

In recent years, the State of Hawaii has endeavored to make Hawaii's business climate more attractive to new investment and business expansion.

For example, a special advisory council and newly appointed special advisor for technology now report directly to the Governor. They are charged with coordinating all high-tech business development activities, and with active promotion and expansion of Hawaii as the location for high-tech companies.

Chart below: Source: Colliers International,
Global Real Estate Review, March 1998

And our greatest efforts have been in tax cuts and business incentives.

• The State initiated comprehensive regulatory reform to eliminate bureaucratic red tape, overlapping jurisdictions, and obsolete regulations; and in 1998, enacted the largest personal income tax cut in Hawaii's history.

• From the beginning of tax year 2000, the 4 percent tax on business transactions will be reduced to 0.5 percent over six years. The reduction applies to all business expenses, except overhead.

• In creating tax incentives, Hawaii now has one of the most "high-tech friendly" tax structures in the nation. Several important initiatives were designed to foster the fast growth of high tech in education, in workforce development, and in government Here's how:

• Investment in technology business earns an income tax credit equal to 10 percent of the investment, to a maximum of $500,000.

• Increasing research activities also qualifies for a tax credit equal to an additional 2.5 percent of expenses over the base amount.

• Taxes aimed at e-commerce on the worldwide web are specifically prohibited.

• Income from stock options in high tech businesses are exempt from capital gains or income taxes.

• Royalty income from the sale or licensing of intellectual property is exempt from both general excise and income taxes.

To level the playing field for Hawaii businesses competing in the world economy, General Excise Tax (G.E.T.) exemptions are provided for Hawaii-based contractors and service businesses fulfilling a contract outside Hawaii. Exported services and contracting, including all custom computer software development costs, are now treated in the same way as exported goods.

Hawaii Enterprise Zones
Qualifying businesses located in one of the 14 Enterprise Zones around the state can qualify for the following tax benefits for seven years.

• 100 percent exemption from General Excise Tax.
• An 80 percent State income tax credit the first year
(declining by 10 percent yearly for six years); and
• An additional State income tax credit equals to 80 percent of the Unemployment Insurance Premiums paid the first year (declining by 10 percent yearly for six years).
• Exemptions from the G.E.T. on new construction or major renovations.

Each of Hawaii's four counties also offer additional benefits that may include one or more of the following:

• Priority permit processing
• Zoning or building permit waivers or variances
• Property tax adjustments
• Priority consideration for federal job training or community development funds.

To be eligible for Enterprise Zone benefits, a business must earn at least half its annual gross receipts in a zone from one or more of the following activities:
• Telecommunications switching and delivery systems;
• Information technology design and production;
• Medical research, clinical trials and telemedicine;
• For-profit international business management or environmental remediation training;
• Manufacturing wholesaling and distribution
• Agricultural production or processing; and
• Aviation and maritime repair and maintenance.

Maps of the Hawaii Enterprise Zones can be found on the State of Hawaii Department of Business, Economic Development & Tourism web site at www.hawaii.gov/dbedt/ezones. The   Enterprise zone status of specific sites may be found on this website at http://gis.hicentral.com/website/ecodev/ed.asp or by clicking on the “Property Locator” tab at the top of this web page.

Foreign Trade Zones
Hawaii's Foreign Trade Zones lie outside U.S. Customs Service territory for tax, duty, and quota purposes, helping companies engaged in international trade significantly reduce their operating costs.

The zones may be used to store, exhibit, manufacture, assemble, re-label, import and export products without payment of duties prior to re-export or entry into U.S. trade. Currently there are 12 Hawaii Foreign-Trade Sub-Zones throughout the state.

For more information, call (808) 586-2423 or visit
www.hawaii.gov/dbedt

Workforce Development
The State of Hawaii offers programs to help companies recruit and train employees in a variety of high demand fields. Customized training programs are offered in conjunction with the University of Hawaii's Community Colleges and other training providers.

Public-Private Sector Partnerships
Finally, the State of Hawaii has begun to vigorously promote public-private partnerships for developing and marketing Hawaii. For example, a newly formed Hawaii Tourism Authority, composed of both private and public representatives, directs the expenditure of funds used to market the state as a destination for both leisure and business. Other partnerships, including many new ones, are transforming the business-government relationship in our state.

Information above provided by: DBEDT "Hawaii Global Islands"