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  • Hawaii Enterprise Zone

    Hawaii Enterprise Zone

    “The state has been moving to diversify its economy, which is heavily dependent on tourism. A generous Enterprise Zone program offers incentives—including relief from that General Excise Tax—for a wide variety of businesses, from call centers to medical research firms.”

    - Scott Cohn, CNBC, America’s Top States for Business 2013

    The Enterprise Zones (EZ) partnership program is a joint state-county effort intended to stimulate—via tax and other incentives—certain types of business activity, job preservation, and job creation in areas where they are most appropriate or most needed. Up to six zones can be designated per county. (See maps for existing zones.)

    If your business (or a branch of your business) is eligible and located in an Enterprise Zone (EZ), you can reduce your state taxes and receive other county benefits for up to seven years by satisfying the EZ hiring and gross receipts requirements.

    Enterprise Zone: Companies Enrolled

     

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    Incentives

    State:

    Businesses which satisfy all requirements will qualify for the following state tax benefits for up to seven consecutive years:

    • 100% exemption from the General Excise Tax (GET) every year. (The GET exemption applies only to gross revenues from EZ-eligible business categories within an EZ.) Licensed contractors are also exempt from GET on construction done within an EZ for an EZ-qualified business. Effective July 1, 2011: The GET exemption for gross proceeds received by qualified businesses in enterprise zones that do not have valid certificates of qualification from DBEDT is suspended. This will affect new companies enrolling in the EZ program during the period July 1, 2011 through June 30, 2013.
    • An 80% reduction of state income tax the first year. (This reduction goes down 10% each year for 6 more years.)
    • An additional income tax reduction equal to 80% of annual Unemployment Insurance premiums the first year. (This reduction goes down 10% each year for 6 more years.)

    NOTE: The two income tax reductions combined cannot exceed 100% of income tax due.

    County:

    Each county will offer eligible businesses 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

    Eligible Businesses

    To enroll in the Enterprise Zone partnership, at least half of a firm’s annual gross income in an EZ must be from one or more of the following activities:

    • Agricultural production or processing
    • Manufacturing
    • Wholesaling/Distribution
    • Aviation or maritime repair or maintenance
    • Telecommunications switching and delivery systems
    • Information technology design and production
    • Medical research, clinical trails, and telemedicine
    • For-profit training programs in international business management or environmental remediation
    • Biotechnology research, development, production, or sales
    • Repair or maintenance of assisted technology equipment
    • Certain types of call centers
    • Wind energy producers

    Almost all other businesses are not eligible, including retailers and professional services. Contractors (firms which build, maintain, or repair real estate, such as custodial, construction, painting, electrical, and plumbing firms) also cannot enroll in the EZ program.

    For more information regarding the Hawaii Enterprise Zones Program, contact Wayne Thom at wthom@dbedt.hawaii.gov.