Hawaii — Sales & Use Tax

Hawaii does not impose a traditional retail sales tax. Instead, Hawaii levies a general excise tax (GET) under Chapter 237, Hawaii Revised Statutes, which is a privilege tax on business activity rather than a tax on consumers. The GET is imposed on the gross income or gross proceeds received by persons engaged in business in Hawaii, covering virtually all business activities including sales of goods, services, rentals, and professional services. Unlike a sales tax, which typically applies only at the final retail sale of tangible personal property, the GET applies to multiple stages of production and distribution and is legally imposed on the business, not the purchaser. Businesses may pass the GET on to customers, but this is a contractual matter, not a legal requirement.

Hawaii also imposes a complementary use tax under Chapter 238 on property, services, and contracting imported into Hawaii from unlicensed sellers not subject to the GET.

Source: Haw. Rev. Stat. § 237-13 | Haw. Rev. Stat. § 238-2

Hawaii's general excise tax is imposed at multiple rates depending on the business activity. The standard retail rate is 4% of gross income, applied to most business activities including retail sales, services, and rentals. The wholesale rate is 0.5% and applies to income from manufacturing, producing, wholesaling, and certain specified business-to-business transactions. A special rate of 0.15% applies to commissions earned by licensed insurance producers under chapter 431.

Source: Haw. Rev. Stat. § 237-13

Counties may adopt by ordinance a surcharge of up to 0.5% on transactions subject to the 4% general excise tax rate. The surcharge does not apply to transactions taxed at the 0.5% wholesale rate or the 0.15% insurance commission rate. All four Hawaii counties have adopted the maximum 0.5% surcharge: City and County of Honolulu (effective January 1, 2007), County of Kauai (effective January 1, 2019), County of Hawaii (effective January 1, 2020), and County of Maui (effective January 1, 2024). All current county surcharges are scheduled to expire December 31, 2030, the same date on which Haw. Rev. Stat. § 237-8.6—the statutory authority for county surcharges—is itself set to repeal. The combined state and county rate for most retail transactions is 4.5%.

Source: Haw. Rev. Stat. § 237-8.6 | Hawaii Dept. of Taxation, County Surcharge Information

A business without physical presence in Hawaii is engaged in business and subject to general excise tax if, in the current or immediately preceding calendar year, it has $100,000 or more in gross income from sales of tangible personal property delivered in Hawaii, services used or consumed in Hawaii, or intangible property used in Hawaii, OR conducts 200 or more separate transactions involving such sales. The thresholds are disjunctive; meeting either triggers nexus. This economic nexus provision applies to taxable years beginning after December 31, 2017.

Source: Haw. Rev. Stat. § 237-2.5

Any person who receives gross income or gross proceeds of sales subject to the general excise tax must obtain a license from the Hawaii Department of Taxation before engaging in or continuing that business. The license is issued upon payment of a one-time $20 fee. Businesses apply using Form BB-1, the State of Hawaii Basic Business Application. The license is not transferable and is valid only for the person and business location designated on the license; it must be conspicuously displayed at the place for which it is issued.

Source: Haw. Rev. Stat. § 237-9

General excise tax licensees must file periodic returns (Form G-45) on a monthly, quarterly, or semiannual basis depending on their annual GET liability, with all returns and payments due on the 20th day of the month following the close of the filing period.

Default filing frequency: monthly

Under Haw. Rev. Stat. § 237-30(a), the general rule requires taxpayers to file monthly returns on or before the twentieth day of the calendar month following the month in which the taxes accrue. This applies unless the Department of Taxation grants a permit for less frequent filing.

Quarterly filing

The Director of Taxation may permit quarterly filing if the taxpayer's annual GET liability will not exceed $4,000 for the calendar or fiscal year. Quarterly returns are due on or before the twentieth day of the calendar month after the close of each quarter. For calendar year taxpayers, the quarterly due dates are April 20, July 20, October 20, and January 20. For fiscal year taxpayers, returns are due on or before the twentieth day of the fourth month, seventh month, and tenth month following the beginning of the fiscal year, and on or before the last day of the month following the close of the fiscal year.

Semiannual filing

The Director may permit semiannual filing if the taxpayer's annual GET liability will not exceed $2,000 for the calendar or fiscal year. Semiannual returns are due on or before the twentieth day of the calendar month after the close of each six-month period. For calendar year taxpayers, the semiannual due dates are July 20 and January 20. For fiscal year taxpayers, returns are due on or before the twentieth day of the seventh month following the beginning of the fiscal year and on or before the last day of the month following the close of the fiscal year.

Revocation of less-frequent filing privileges

Under § 237-30(c), the Director may revoke a taxpayer's permit to file quarterly or semiannually if the taxpayer becomes delinquent in filing or payment, if the taxpayer's GET liability exceeds the applicable threshold ($2,000 for semiannual filers or $4,000 for quarterly filers), or if the Director determines that less-frequent filing would unduly jeopardize proper tax administration. Upon revocation, the taxpayer must revert to monthly filing.

Annual reconciliation return required

Haw. Rev. Stat. § 237-33 requires every taxpayer subject to GET to file an annual return and reconciliation (Form G-49) in addition to the periodic returns. This annual return reconciles the taxpayer's account for the entire calendar or fiscal year and is due on or before the twentieth day of the fourth month following the close of the taxable year (April 20 for calendar-year filers).

Source: Haw. Rev. Stat. § 237-30 | Haw. Rev. Stat. § 237-33

Hawaii's general excise tax (GET) exemptions are primarily codified in Haw. Rev. Stat. §§ 237-23 through 237-29, with several key “amounts not taxable” exceptions found under §§ 237-24.3, 237-24.5, 237-24.7, and 237-24.75. The GET has a notably broad base but includes select entity-based, transaction-based, and industry-specific exemptions, along with significant healthcare and phased grocery/nonprescription drug exemptions enacted in recent years.

Nonprofit and exempt-entity exemptions (§ 237-23) Section 237-23(a) exempts a defined set of organizations: the United States and its instrumentalities (except national banks); the State of Hawaii and subdivisions; churches and societies conducting exempt religious activities; IRC § 501(c)(3) organizations; fraternal societies; hospitals and infirmaries; potable water companies under IRC § 501(c)(12); certain cooperatives; persons with Hansen’s disease in Kalawao County; and cemetery companies. Some organizations in subsection (a)(3)-(7) must complete registration and pay a $20 fee (§ 237-23(b)). These exemptions are generally limited to non-profit activities; ordinary business activities by exempt organizations may remain taxable unless otherwise qualified.

Federal sales and credit union exemptions (§ 237-25) Section 237-25(a) exempts all gross proceeds from sales of liquor, tobacco, and cigarettes to the federal government or military organizations, with a parallel exemption for manufacturing in § 237-25(d).

Industry/transaction-specific carve-outs (§§ 237-26 – 237-29) Includes: scientific contracts with the U.S. (§ 237-26), petroleum refiners (§ 237-27), air pollution control/solid waste/electric generating facilities (§ 237-27.5, § 237-27.6), shipbuilding/repair (§ 237-28.1), and certified housing projects (§ 237-29, referencing § 201H-36 certification).

Healthcare-related exemption (Act 47, effective January 1, 2026) Amounts received by hospitals, clinics, physicians, dentists, pharmacies, or APRNs for goods/services paid via or reimbursed by Medicare, Medicaid (including QUEST Integration), or TRICARE—plus related copayments and deductibles—are exempt from GET for periods beginning January 1, 2026. Providers must substantiate mixed-reimbursement claims. For further details, see Hawaii Dept. of Taxation TIR No. 2025-02 (issued August 1, 2025).

Grocery and nonprescription drug phased exemption (HB 1611, Session Laws 2026) HB 1611, enacted as Session Laws of Hawaii 2026, phases in a GET exemption for retail sales of groceries and nonprescription drugs through a multi-year schedule. Reduced rates apply from January 1, 2027, with full exemption by January 1, 2034. The statutory schedule is:

• 2% retail rate Jan 1, 2027—Dec 31, 2029
• 1% retail rate Jan 1, 2030—Dec 31, 2031
• 0.5% retail rate Jan 1, 2032—Dec 31, 2033
• Full exemption effective January 1, 2034

The same progression applies to county surcharges and a similar phase-in for wholesale transactions. See the session law and official Department guidance for precise applicability.

Common “amounts not taxable” exceptions

• Interisland agricultural shipping (§ 237-24.3(1))
• Condominium & homeowners association reimbursements (§ 237-24.3(2))
• Employee benefit plan income (§ 237-24.3(4))
• Certain operator wage reimbursements, county transit pass-throughs, and beverage container deposits (§§ 237-24.7, 237-24.75)

Eligibility for all exemptions and exclusions must be substantiated by registration, documentation, and compliance with statutory conditions (§ 237-41). This summary reflects statutory and published Department guidance as of June 2026; practitioners should confirm the precise effective dates and conditions of scheduled/future changes, and consult Department rulings or TIRs as issued.

Source: Haw. Rev. Stat. § 237-23 | Haw. Rev. Stat. § 237-25 | Haw. Rev. Stat. § 237-24.3 | Haw. Rev. Stat. § 237-24.7 | Haw. Rev. Stat. § 237-24.75 | Act 47 (S.B. 1035), Sess. Laws Haw. 2024 | HawaIi Dept. of Taxation TIR No. 2025-02 | Hawaii Legislature: House Bill 1611 (2026)

Hawaii's use tax under Chapter 238, Hawaii Revised Statutes, complements the general excise tax (GET) by imposing an excise tax on the use in Hawaii of tangible personal property, services, or contracting that is imported from an out-of-state unlicensed seller—that is, a seller who is not subject to Hawaii GET on the particular transaction. The use tax prevents businesses and individuals from avoiding Hawaii taxation by purchasing from out-of-state vendors who do not collect GET.

When the use tax applies

The use tax applies to three categories of imported items purchased from unlicensed sellers:

Tangible personal property (HRS § 238-2). Hawaii imposes a use tax on tangible personal property imported into the state for use, whether owned, purchased from an unlicensed seller, or however acquired. An "unlicensed seller" means any seller who, with respect to the particular sale, is not subject to the tax imposed by Chapter 237 (the GET), whether or not the seller holds a license under that chapter. The tax accrues when the property is acquired by the importer or purchaser and becomes subject to the taxing jurisdiction of the State.

Services (HRS § 238-2.3). The use tax also applies to services imported into Hawaii and used or consumed in the state when purchased from an unlicensed seller.

Contracting (HRS § 238-2.3). The use tax applies to contracting imported into Hawaii and used in the state when purchased from an unlicensed seller.

The use tax does not apply if the transfer of the property, services, or contracting to the purchaser has actually been or actually is taxed under Chapter 237 (the GET). HRS § 238-3(b) provides that the use tax does not apply to any use of property, services, or contracting the transfer or acquisition of which has actually been or actually is taxed under the GET, preventing double taxation.

Who pays the use tax

HRS § 238-1 defines "purchaser" as any person purchasing property, services, or contracting, and "importer" as any person importing property, services, or contracting, regardless of whether the item is owned by the importer, purchased from an unlicensed seller, or however acquired at the time of importation. The terms exclude the State, its political subdivisions, wholly owned agencies or instrumentalities of the State or a political subdivision, the United States, its wholly owned agencies or instrumentalities, and any person immune from the tax under the Constitution and laws of the United States—but the terms expressly include national banks.

Use tax rates

Use tax rates mirror the GET rates and depend on the taxpayer's status and use of the imported item. HRS § 238-2 sets the following rates for tangible personal property:

• Exempt (0%): If the importer or purchaser is licensed under Chapter 237 and is a wholesaler or jobber importing or purchasing tangible personal property exclusively for purposes of resale at wholesale, or a manufacturer importing or purchasing material to be incorporated into a finished product which, when sold, will result in a further tax on the manufacturer as a wholesaler, the property is exempt from use tax.

• 0.5% rate: If the importer or purchaser is licensed under Chapter 237 and is (1) a retailer or other person importing or purchasing for purposes of resale and not exempted above, (2) a manufacturer who sells products at retail, or (3) a contractor incorporating imported or purchased material into a finished work or project, the tax is 0.5% of the purchase price (if the purchase and sale are consummated in Hawaii) or 0.5% of the value of the property (if the purchase or sale is consummated outside Hawaii or there is no applicable purchase price).

• 4% rate: In all other cases, the tax is 4% of the value of the property.

HRS § 238-2.3 imposes tax on imported services and contracting at the same rate structure. County surcharges on use tax are authorized under HRS § 238-2.6; the surcharge may not exceed 0.5% and does not apply to use taxable at the 0.5% rate or to exempt use.

Filing forms and payment timing

HRS § 238-5(a) requires any person who becomes liable for use tax during a calendar month to file a return on or before the twentieth day of the following calendar month. The return must set forth a description of the property, services, or contracting and the character and quantity in sufficient detail to identify it, and state the purchase price or value. The return must be accompanied by a remittance in full of the tax computed at the rate specified in § 238-2 or § 238-2.3. Any tax remaining unpaid after the twentieth day following the end of the month during which the tax first became payable becomes delinquent.

Periodic use tax returns are filed on Form G-45, the same form used for periodic GET returns; businesses report both GET and use tax liability on the same monthly, quarterly, or semiannual return.

HRS § 238-5(b) allows less-frequent filing (quarterly or semiannual) for eligible taxpayers during the calendar or fiscal year, with returns and payment due on or before the twentieth day of the calendar month after the close of each quarter or semiannual period. For calendar year taxpayers filing quarterly, the due dates are April 20, July 20, October 20, and January 20; for semiannual filers, July 20 and January 20. Eligibility for less-frequent filing is subject to Director of Taxation approval and typically tracks the taxpayer's GET filing frequency.

HRS § 238-5(c) requires every person subject to both use tax and GET to file an annual return summarizing liability under Chapter 238 for the taxable year, on or before the twentieth day of the fourth month following the close of the taxable year, filed together with the annual GET return. The annual return is Form G-49, which reconciles both GET and use tax for the year; for calendar year taxpayers, Form G-49 is due April 20.

Credit for tax paid to other states

HRS § 238-3(i) provides that each taxpayer liable for Hawaii use tax on tangible personal property, services, or contracting is entitled to a full credit for the combined amount of legally imposed sales or use taxes paid by the taxpayer to another state (and any subdivision thereof) with respect to the same transaction and property, services, or contracting. The credit may not exceed the amount of Hawaii use tax imposed on the transaction. The Director of Taxation may require the taxpayer to produce receipts or vouchers indicating payment of sales or use tax to another state as a condition for allowing the credit. This credit is claimed on Schedule GE (Form G-45/G-49), the exemptions and deductions schedule attached to the periodic or annual return.

Interplay with GET liability

A business that imports property, services, or contracting from an unlicensed seller and pays Hawaii use tax on that import does not receive a credit against its own separate GET liability for the use tax paid. The use tax is a tax on the use of the imported item; GET is a tax on the business's own sales and receipts. The two taxes apply at different stages and are not offset against each other.

However, HRS § 238-3(b) prevents double taxation when the same transaction is subject to both GET and use tax: if a Hawaii-licensed seller has already paid GET on the transfer of property, services, or contracting, the purchaser's use of that item is not subject to use tax. In other words, use tax applies only when the seller is not subject to GET on the particular transaction (i.e., the seller is an "unlicensed seller" for purposes of that sale).

If a business imports goods or services subject to use tax and then resells them in Hawaii, the business pays use tax on the import and separately pays GET on its own resale; the Hawaii use tax paid on the import is part of the business's cost of goods, not a credit against GET due on the resale.

Source: Haw. Rev. Stat. § 238-1 | Haw. Rev. Stat. § 238-2 | Haw. Rev. Stat. § 238-2.3 | Haw. Rev. Stat. § 238-2.6 | Haw. Rev. Stat. § 238-3 | Haw. Rev. Stat. § 238-5 | Hawaii Dept. of Taxation, Form G-45 instructions

Hawaii requires marketplace facilitators to collect and remit general excise tax (GET) on behalf of third-party sellers for sales made through their platforms. This regime became effective January 1, 2020, under Act 2, Session Laws of Hawaii 2019, which added Haw. Rev. Stat. § 237-4.5 to the General Excise Tax Law.

Marketplace facilitator defined

Under Haw. Rev. Stat. § 237-1, "marketplace facilitator" means any person who sells or assists in the sale of tangible personal property, intangible property, or services on behalf of another seller by: (1) providing a forum, whether physical or electronic, in which sellers list or advertise tangible personal property, intangible property, or services for sale; and (2) collecting payment from the purchaser, either directly or indirectly through an agreement with a third party. The definition is not limited to any particular industry or platform type; it encompasses any person meeting both the forum-provision and payment-collection criteria.

Deemed seller and wholesale treatment

Haw. Rev. Stat. § 237-4.5(a) deems a marketplace facilitator to be the seller of tangible personal property, intangible property, or services sold through the marketplace, and deems the seller on whose behalf the sale is made (the "marketplace seller") to be making a sale at wholesale pursuant to Haw. Rev. Stat. § 237-4. This statutory deeming means that the marketplace facilitator is subject to GET at the retail rate (4% under Haw. Rev. Stat. § 237-13(1), plus any applicable county surcharge of up to 0.5% under § 237-8.6) on the full sales price, and the marketplace seller pays GET at the wholesale rate (0.5% under § 237-13(3)) on the amount received from the marketplace facilitator.

Under § 237-4.5(b), the marketplace facilitator's gross income or gross proceeds of sale include receipts from sales on behalf of other sellers under subsection (a). This means the marketplace facilitator reports the full transaction value on its GET return and pays the retail rate, while the underlying marketplace seller reports the same transaction at the wholesale rate.

Registration and nexus requirements

All marketplace facilitators engaged in business in Hawaii must register for a GET license under Haw. Rev. Stat. § 237-9 before engaging in business. Hawaii Department of Taxation Tax Information Release No. 2019-03 (Revised), issued December 19, 2019, clarified that marketplace facilitators and marketplace sellers engaged in business in Hawaii must have registered for GET licenses prior to January 1, 2020, or before starting business activities, whichever is later.

A marketplace facilitator without physical presence in Hawaii is deemed engaged in business in the State—and thus required to register and collect GET—if the facilitator meets the economic nexus thresholds under Haw. Rev. Stat. § 237-2.5: gross income sourced to Hawaii of $100,000 or more, or 200 or more separate transactions with parties in Hawaii, in the current or immediately preceding calendar year. These thresholds apply to the marketplace facilitator's total activity, including sales on its own behalf and sales made on behalf of third-party marketplace sellers.

Impact on marketplace sellers

Under the marketplace facilitator framework, marketplace sellers engaged in business in Hawaii remain subject to GET but at different rates depending on the channel:

• Sales through a marketplace facilitator: The marketplace seller pays GET at the wholesale rate (0.5%) on amounts received from the marketplace facilitator for sales of tangible personal property, intangible property, or services delivered to Hawaii purchasers. The marketplace facilitator is responsible for collecting and remitting GET at the retail rate on the full sales price.

• Direct sales (not through a marketplace facilitator): The marketplace seller pays GET at the retail rate (4%, plus any county surcharge) on its own direct sales into Hawaii.

Because Hawaii's GET is a privilege tax on doing business—not a traditional sales tax—marketplace sellers that meet the nexus thresholds remain required to maintain an active GET license and file periodic returns even when all of their Hawaii sales are made through marketplace facilitators that collect and remit GET on their behalf. TIR 2019-03 (Revised) states that Hawaii "still requires any seller with nexus in the state to remain registered for the General Excise Tax" and that sellers must "charge the wholesale sales tax rate to the marketplace facilitator, and still remit that amount to the state." The marketplace seller may not cancel its GET license solely because a marketplace facilitator is collecting the retail GET.

Use tax application for sales on behalf of unlicensed sellers

Hawaii's use tax law interacts with the marketplace facilitator provisions when a marketplace facilitator makes sales on behalf of sellers that are not themselves licensed under Chapter 237. Under Haw. Rev. Stat. § 238-1 (as amended by Act 2, SLH 2019), the definition of "import" includes "the sale of tangible personal property, intangible property, or services by a marketplace facilitator with a valid license issued pursuant to section 237-9 on behalf of an unlicensed seller for delivery to or use by a purchaser" in Hawaii. The statute does not specify the rate or mechanics of use tax collection in this scenario; TIR 2019-03 (Revised) states that marketplace facilitators are "subject to use tax at the wholesale rate" for sales of tangible personal property through the marketplace where the marketplace seller is not engaged in business in Hawaii, for sales of tangible personal property delivered to the marketplace facilitator outside of Hawaii prior to the sale through the marketplace, and for sales of services through the marketplace where the marketplace seller is not engaged in business in Hawaii and the services are ultimately used and consumed in Hawaii.

Effective date

Act 2, Session Laws of Hawaii 2019, became effective January 1, 2020. All marketplace facilitators and marketplace sellers meeting the nexus thresholds were required to register for GET licenses by that date or before commencing business activities, whichever is later.

Source: Haw. Rev. Stat. § 237-4.5 | Haw. Rev. Stat. § 237-1 | Haw. Rev. Stat. § 237-2.5 | Haw. Rev. Stat. § 238-1 | Hawaii Dept. of Taxation Tax Information Release No. 2019-03 (Revised)

Direct answer: As of June 2026, the statutory authority for all Hawaii county surcharges on the General Excise Tax (GET) is scheduled to sunset on December 31, 2030, under Haw. Rev. Stat. § 237-8.6. Several legislative proposals are pending to reauthorize, extend, or modify this authority for periods beyond 2030, but as of this writing, no extension or replacement has been enacted into law.

Why: Haw. Rev. Stat. § 237-8.6 currently authorizes counties to impose up to a 0.5% surcharge on taxable transactions subject to the GET's 4% base rate, with authority set to terminate at the end of 2030. The statute itself is repealed effective December 31, 2030. The future of the county surcharge regime therefore depends on legislative action prior to that date.

In recent legislative sessions, multiple bills have been introduced to address the expiration:

• Senate Bill 3293 (2025-2026): Would allow counties to continue their current surcharges beyond 2030, splitting future revenue equally between counties and the state (with the state share designated for medical assistance).
• Senate Bill 310 (2025-2026): Would permanently authorize county surcharges after 2030, but at a reduced maximum rate of 0.25%.
• House Bill 2073 (2026): Would extend current county surcharge authority through December 31, 2045, contingent upon each county adopting an implementing ordinance by January 1, 2028.

As of June 2026, none of these bills has been enacted, and the legislative outcome remains unresolved. Practitioners should monitor future legislative activity for changes to the expiration or structure of county surcharges.

Source support:

• The existing December 31, 2030, sunset is specified in Haw. Rev. Stat. § 237-8.6.
• Current legislative status of relevant bills (as of June 2026) is available through the official Hawaii State Legislature records and bill tracking for SB 3293, SB 310, and HB 2073.

Caution / review status: Not yet human confirmed. Practitioners should check official sources for any updates beyond June 2026. Legislative status can change rapidly near sunset periods.

Source: Haw. Rev. Stat. § 237-8.6 | Hawaii Legislature: Senate Bill 3293 (2025-2026) | Hawaii Legislature: Senate Bill 310 (2025-2026) | Hawaii Legislature: House Bill 2073 (2026)

Hawaii’s General Excise Tax (GET) requires that gross income from services and intangible property used both within and outside the state be apportioned to determine the share taxable in Hawaii. This rule applies to multistate businesses that provide services in Hawaii and elsewhere, or license intangibles for use in multiple jurisdictions.

Gross income allocation for services performed inside and outside Hawaii Under Hawaii Administrative Rules (HAR) § 18-237-8.6-03, when services are performed partly in Hawaii and partly elsewhere, only that portion of the gross income attributable to services actually performed in Hawaii is subject to GET. The rule allows a taxpayer to use any reasonable and consistently applied method to allocate or apportion receipts, such as the ratio of time spent performing services in Hawaii to total time, or another quantifiable measure. The Department of Taxation expects taxpayers to document and support the chosen method and to apply it consistently year to year.

Gross income from intangibles used inside and outside Hawaii Where rights to intangible property (such as licenses or royalties) involve use both in and outside Hawaii, the receipts must similarly be apportioned. The portion of gross receipts attributable to Hawaii—based on the proportion of use or benefit received in Hawaii—is included in the GET base. As with services, the allocation method must be reasonable, consistently applied, and supported by records.

Imported services and contracting Haw. Rev. Stat. § 238-2.3 imposes a complementary use tax at a 0.5% rate on the value of services or contracting performed outside the state but imported for use in Hawaii, when those services become an identifiable element (not general overhead) of services performed in Hawaii by the importer. This prevents avoidance of tax by having services performed out of state but consumed in Hawaii.

General authority for apportionment If a taxpayer is unable to determine the Hawaii and non-Hawaii portions through separate accounting, HRS § 237-21 authorizes apportionment of gross income using the ratio of in-state cost of doing business to total cost of doing business or another formula approved by the Department if necessary to fairly reflect Hawaii business activity.

Source: HAR § 18-237-8.6-03 | Haw. Rev. Stat. § 238-2.3 | Haw. Rev. Stat. § 237-21

Hawaii provides detailed statutory procedures and deadlines for audit, assessment, appeal, and refund claims under the General Excise Tax (GET) and Use Tax. The statutes governing these processes are structured to ensure taxpayers receive notice of deficiencies, opportunities to confer, specific rights of appeal, and defined remedies for refund claims.

Audit and Assessment Procedures For both GET and Use Tax, the Department of Taxation may audit and question returns. If the Department determines a deficiency, it must notify the taxpayer and provide a 30-day period for the taxpayer to request a conference before additional tax is assessed (Haw. Rev. Stat. § 237-36(a)). Following the conference or expiration of this window, the Department issues a written notice of final assessment. The mailing of this final assessment triggers the taxpayer's appeal rights.

Appeals Taxpayers may appeal a final assessment of GET or Use Tax to the Hawaii Tax Appeal Court. For GET, appeals are governed by Haw. Rev. Stat. § 237-42; for Use Tax, Haw. Rev. Stat. § 238-8; and general appeal procedures are found at Haw. Rev. Stat. § 232-14. Appeals must be filed within thirty days after the mailing of the final assessment.

The Department of Taxation also offers the Administrative Appeals and Dispute Resolution (AADR) program, which allows informal administrative review of proposed or final assessments. This program is based on Department guidance, not statutory text, and eligible requests for AADR review must be received by the Department within 20 days of a proposed assessment or 30 days of a final assessment or preparer penalty notice. (Practitioners should confirm the most current procedures with the Department's official AADR materials; the AADR program does not extend court appeal deadlines.)

Refunds and Credits Refund claims for overpayments must be made in accordance with the statutes: GET refunds are governed by Haw. Rev. Stat. § 237-37 and Use Tax refunds by Haw. Rev. Stat. § 238-11. In both cases, the statute of limitations is three years from the date the return was filed or two years from the date the tax was paid, whichever is later. The Department will allow or disallow the claim by written notice, which is subject to appeal as with assessments. No separate refund claim section currently exists for GET or Use Tax appeals, so the standard assessment appeal provisions apply.

Summary Deadlines:

• Conference after audit notice: 30 days (§ 237-36(a))
• Court appeal of final assessment: 30 days (§ 237-42 for GET; § 238-8 for Use Tax)
• Refund claim period: Three years from return filing or two years from payment (§ 237-37 for GET; § 238-11 for Use Tax)

Where Department guidance creates administrative pathways (e.g., AADR), practitioners should follow both the Department’s program rules and statutory deadlines for appeals, as the statutory periods are jurisdictional.

Source: Haw. Rev. Stat. § 237-36 | Haw. Rev. Stat. § 237-37 | Haw. Rev. Stat. § 237-42 | Haw. Rev. Stat. § 232-14 | Haw. Rev. Stat. § 238-8 | Haw. Rev. Stat. § 238-11

Not yet human confirmed. Practitioners should confirm the interplay between AADR and statutory deadlines with the Department in evolving cases.

Hawaii’s General Excise Tax (GET) reaches nearly all gross income earned by Hawaii-based businesses, but certain out-of-state sales and exported services are eligible for deductions or exemptions if stringent statutory conditions are met.

Sales of tangible personal property shipped out of Hawaii Under Haw. Rev. Stat. § 237-29.5(a), gross proceeds from the sale of tangible personal property are deductible from the GET base if the property is delivered to a common carrier or forwarding agent for shipment to a point outside Hawaii. The deduction applies only if the seller ships the goods out of Hawaii (directly or via a common carrier/forwarder) and retains documentation (e.g., bills of lading, shipment records) to demonstrate the export. Personal pickup or hand-delivery to out-of-state customers disqualifies the deduction; proof of actual export is required.

Exported services and contracting Effective for gross income received after December 31, 2000, receipts from services (including contracting) exported for use outside Hawaii are deductible under Haw. Rev. Stat. § 237-29.53, provided the purchaser does not resell or use the service in Hawaii and the Department of Taxation’s apportionment and record-keeping requirements are met. Hawaii Administrative Rules (HAR) § 18-237-29.53-02 requires the business to obtain a Hawaii Form G-61 (Export Exemption Certificate) or other acceptable evidence from the customer, certifying the service/use is outside Hawaii. Mixed-use (some in-state, some out-of-state) requires reasonable allocation, usually based on documented usage or time.

Documentation and claiming deductions Both deductions must be claimed on the periodic and annual GET returns and are subject to scrutiny. Failure to retain export documentation (for goods) or exemption certificates (for services) may result in disallowance. The burden of proof is on the taxpayer.

Mainland clients and services Services performed in Hawaii but used or consumed by out-of-state clients are potentially excludable, but only if all the requirements above are strictly satisfied. The rules are narrowly construed; simply invoicing a mainland client does not suffice if the benefit of the service is realized in Hawaii.

Source: Haw. Rev. Stat. § 237-29.5 | Haw. Rev. Stat. § 237-29.53 | HAR § 18-237-29.53-02

Hawaii's General Excise Tax (GET) applies broadly to gross income derived from business activity in Hawaii—including most transactions between related parties or affiliates—unless a specific statutory exemption exists. The principal statutory carve-out relevant to intercompany charges is the "common paymaster" exemption, but most intercompany management fees, service charges, or cost allocations do not qualify for exemption under current Hawaii statutes.

Statutory base and scope Haw. Rev. Stat. § 237-13 imposes GET on the gross income or proceeds from all business activities in Hawaii, without regard to whether parties are related or independent. The law does not generally distinguish between arms-length transactions and those between commonly controlled companies; unless a specific exclusion applies, receipts from intercompany transactions are included in the GET base.

Common paymaster exemption for employee compensation reimbursements The most explicit related-party exemption is found in Haw. Rev. Stat. § 237-23.5, which excludes from GET amounts received by one related entity from another purely as reimbursement for employee compensation (including wages, payroll taxes, insurance, and benefits) actually paid by a "common paymaster" entity (as defined in Internal Revenue Code § 3121(s)). The exemption is narrow—it only applies to pass-through reimbursement of employee compensation, not to mark-ups, management fees, or broader intercompany cost allocations. In each case, eligibility turns on the factual arrangement and whether the common paymaster standards are met.

Other intercompany charges: no general exemption The statute is silent regarding management, administrative, or service fees, and cost allocations outside of the common paymaster scenario. There is no express statutory exclusion for these types of receipts; in practice, such amounts received by an affiliate for services, goods, or overhead allocations are included in the GET base unless an exemption in another section expressly applies. This conclusion follows from the general rule of broad GET coverage and the specific, limited nature of the exemption for payroll reimbursement.

Documentation and anti-abuse scrutiny Section 237-23.5 requires substantial documentation to substantiate eligibility for the common paymaster exemption, including evidence of actual payment, reimbursement, the necessary employment relationship, and adherence to IRS standards for common paymaster arrangements. The burden is on the taxpayer to show the transaction falls within the statutory terms. While Hawaii law does not set out an explicit anti-abuse or transfer pricing regime for GET, the Department of Taxation may review the substance of intercompany arrangements to ensure that only legitimately exempt amounts qualify.

Authority notes

• The direct exemption and its requirements are grounded in Haw. Rev. Stat. § 237-23.5.
• The inclusion of other intercompany receipts is supported by the base rule of § 237-13; no exclusion is specified elsewhere in the statutes as of June 2026.
• If additional exemptions are adopted or further interpretive guidance is issued, practitioners should consult the latest published statutes and Department of Taxation materials.

Source: Haw. Rev. Stat. § 237-13 | Haw. Rev. Stat. § 237-23.5

Hawaii's General Excise Tax (GET) is imposed on the gross income or gross proceeds of businesses for virtually all business activities in the state. While the GET is a tax on the business, Hawaii businesses often "pass on" the GET to their customers as a visible charge—either stated separately on the invoice or as part of the total price. This pass-on is a business practice, not a statutory requirement.

Taxation of passed-on GET amounts — "tax on tax"

When a business includes an explicit GET charge on an invoice or in a quoted price, Hawaii law generally requires that the amount collected from the customer—including any amount identified and collected as GET—is subject to the GET itself. In other words, the GET is imposed on the total gross income received, whether or not an invoice line-item specifies an amount as GET. Hawaii Revised Statutes § 237-24(16) clarifies that amounts "passed on" to customers as GET do not reduce the business's gross income subject to the tax unless a specific deduction or exemption applies elsewhere in the law. The effect is that the GET is computed on the full amount, resulting in a cascade or "pyramiding" effect—GET is due even on the GET passed through to the buyer.

Disclosure and notice requirements

There is no statutory requirement that businesses separately disclose the GET as a line item on the invoice to customers; this is optional. However, Haw. Admin. Rules § 18-237-8(a) provides that if a business elects to state the GET separately, it must not represent the tax as being imposed directly on the customer or required by law to be separately stated. Any GET line item is simply part of the total sales price subject to tax. Failure to follow the administrative guidance may be deemed misleading. The Department of Taxation's "Tax Facts" publications and various form instructions reiterate that pass-on charges do not affect the measure of tax, and advise on proper representations.

Practical example

If a retailer makes a $100 sale and separately shows $4.17 GET on the invoice (assuming a 4.166% effective combined rate), the taxable gross receipts for the retailer are $104.17—the charge paid by the customer including the tax labeled as GET. GET is calculated on this amount, not just the pre-tax subtotal.

Authority and interpretive guidance

• Haw. Rev. Stat. § 237-24(16) explicitly precludes excluding passed-on GET from gross proceeds subject to tax.
• Haw. Admin. Rules § 18-237-8(a) prescribes how GET may be represented on invoices and bars businesses from presenting GET as a sales tax on the customer.
• Hawaii Dept. of Taxation "Tax Facts" No. 37-1 and relevant G-45/49 form instructions.

Source: Haw. Rev. Stat. § 237-24(16) | Haw. Admin. Rules § 18-237-8(a) | Hawaii Dept. of Taxation Tax Facts No. 37-1 | Hawaii Dept. of Taxation, Form G-45 instructions

Hawaii law authorizes counties to impose a surcharge of up to 0.5% not only on transactions subject to the General Excise Tax (GET) but also on transactions subject to the state's use tax under Chapter 238. This parallel application is mandated by Haw. Rev. Stat. § 238-2.6, which incorporates the county surcharge mechanism for imported goods, services, or contracting that are otherwise subject to use tax, provided those transactions are taxed at the 4% state rate. The same counties (Honolulu, Maui, Kauai, and Hawaii) that have adopted county surcharges for GET have also extended them to use tax, with the same effective dates and scheduled expiration (December 31, 2030) as surcharges under GET.

How the surcharge applies

• The county surcharge is imposed on the same tax base as the 4% use tax rate. Import transactions taxed at the reduced 0.5% use tax rate (e.g., qualifying resale and manufacturing imports) are not subject to the surcharge, mirroring the treatment under GET.
• The county in which the property, service, or contracting is first used, consumed, or rendered determines which surcharge applies. For transactions spanning more than one county, the Department of Taxation allocates the surcharge based on apportionment rules, and the taxpayer must follow allocation instructions in the official return and guidance forms (e.g., Form G-45 instructions).
• The maximum combined state and county use tax rate is 4.5% in counties that have adopted the maximum surcharge.

No notable differences between GET and use tax surcharges Statutory language and Department of Taxation guidance confirm that the scope, computation, and allocation of county surcharges on use tax follow the same rules as those for GET. There are no substantive differences in rate, base, effective date, or expiration specific to use tax. Both surcharges are filed and reported on the same periodic (G-45) and annual (G-49) returns. Department guidance provides examples of use tax surcharge calculation and reporting alongside GET on the same forms.

Statutory references and official guidance

• Haw. Rev. Stat. § 238-2.6 directly authorizes the county surcharge on use tax.
• Department of Taxation webpage "County Surcharge Information" and Tax Facts No. 37 clarify that the surcharge applies uniformly to both GET and use tax.

Source: Haw. Rev. Stat. § 238-2.6 | Hawaii Dept. of Taxation, County Surcharge Information | Hawaii Dept. of Taxation, Form G-45 instructions