General Information for Businesses
The Enterprise Zones (EZ) partnership is a joint state-county business effort 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.
If your business (or a branch of your business) is eligible and is located in an (EZ), you can reduce your state income and general excise taxes and receive county benefits for up to seven years by satisfying the EZ hiring and gross receipts requirements.
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
- 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.
All eligible businesses must also increase their average annual number of full-time employees. All businesses must already employ at least one full-time worker at their EZ establishment before beginning participation. (Full-time = 20 or more hours per week.) The specific requirements that must be satisfied by existing and new businesses are described as follows:
- “Existing” businesses: Businesses already in an EZ must increase their average annual number of full-time employees by at least 10% by the end of the first year. Maintain that level for yrs 2 and 3. And then increase the average annual number of full-time employees by at least 15% annually in years 4 to 7.
- “New” businesses: Businesses that start up in or move to an EZ must increase their average annual number of full-time employees by at least 10% by the end of the first year. The average annual number of full-time employees at the end of years 2 to 7 can fluctuate, but cannot be less than the number of employees required at the end of the first year. (Note: “New” businesses will be considered new throughout their seven years of eligibility.)
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.
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
Business participation can begin after each County selects areas for zone designation. Once zone designations have been made, further inquiries can be addressed by calling the Mayor’s office of the county in which your business is or will be located, or the State of Hawaii’s Department of Business, Economic Development, and Tourism (DBEDT).
The DBEDT Enterprise Zones partnership coordinator can be reached at the following numbers:
Oahu: (808) 768-5861
Hawaii: (808) 961-8496
Maui: (808) 270-7710
Kauai: (808) 241-4949
Molokai and Lanai: 1 (800) 270-7710
(If you are calling from the Neighbor Islands, dial the number for your island then dial extension 62593 – these numbers are toll free and will transfer to the State Enterprise Zones Coordinator.)