Hawaii Enterprise Zones

“The state has been moving to diversify its economy, which is heavily dependent on tourism. A generous Enterprise Zones 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 one of the Enterprise Zones (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 Zones: 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 Zones 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.

Zone Locations

Each county can select up to six zones at any time for approval by the Governor. Zones exist for 20 years each. Zones can also be expanded into adjacent eligible areas at any time for the remainder of the original zone’s 20-year existence. 19 zones currently exist statewide. All or part of the following areas have been designated on the dates indicated:

City and County of Honolulu

  1. Haleiwa and part of Waialua (the area immediately surrounding the old Waialua Sugar mill site): OCT. 1996*.
  2. Mililani Technology Park and parts of Wahiawa: OCT. 1996.
  3. Waipahu (old Oahu Sugar mill site), Pearl City (Manana parcel), Waipio (business park), and Waiawa: OCT. 1996 (All of Kapolei, and most of Campbell Industrial Park, Ewa, and Kunia were added to this zone in March of 1999.)
  4. Urban Honolulu (airport, Kalihi, Iwilei, downtown, Ala Moana): APRIL 2001.
  5. Leeward Oahu: APRIL 2001.

*This zone was expanded by the Legislature (effective 12/31/96) to include all agricultural lands in the Waialua district until June 30, 2002. In November of 1997, the Governor approved further expansion of this zone by the City and County of Honolulu to include parts of Pupukea and Mokuleia for the remainder of the original zone’s 20-year lifespan. The Governor also approved another expansion of this zone by the City and County in January, 2001, from Pupukea to Ka‘a‘awa on the windward side of Oahu. This expansion will also remain in effect for the rest of the original zone’s 20-year lifespan.

Hawaii County

(Note: On 12/18/01, expansion of all Big Island zones except Ka’u was approved by the Governor.)

  1. Hamakua: OCT. 1994
  2. Hilo-Puna: OCT. 1994
  3. North Kona: OCT. 1994
  4. Ka‘u: MAY 1995
  5. South Kona: APR. 1996
  6. North Kohala: APR. 2000

Kauai County

  1. Lihue and vicinity: MAY 1996
  2. North Shore: FEB. 1997
  3. Kapaa and vicinity: FEB. 1997
  4. South Central Kauai: APR. 1997
  5. West Kauai: APR. 1997

Maui County

  1. Molokai (entire island): JAN. 1997
  2. East Maui: APR. 2000
  3. Lanai (entire island): APR. 2000
  4. West Maui: MAY 2006
  5. Greater Maui: MAY 2006