INCENTIVES & TAX CREDITS

IMPORTANT NOTICE (Posted November 21, 2019 /UPDATED January 6, 2020)

On November 7, 2019, Governor David Ige signed and adopted new Hawaii Administrative rules relating to the Motion Picture, Digital Media, and Film Production Income Tax Credit.  These new Rules, which took effect on November 17, 2019, supersede the previously-issued film credit guidance.

IMPORTANT NOTICE TO ALL TAX CREDIT APPLICANTS AND CLAIMANTS:

The Hawaii Department of Taxation has issued new Hawaii Administrative Rules.

Please review the above documents carefully before registering for the tax credit.

 

ALL TAX CREDIT APPLICANTS SHOULD CONTACT THE APPLICABLE STATE AND COUNTY FILM OFFICES FOR ANY NECESSARY PERMITS FOR FILMING IN HAWAII WITHIN STATE OR COUNTY JURISDICTIONS.

Governor David Ige signed into law Act 143 which took effect January 1, 2019.  ACT 143 extends the sunset date for the tax credit program to January 1, 2026 and institutes a $35 million overall spending ceiling per year.  TIR 2019-01 provides detailed guidelines for administration of ACT 143.

UPDATE: As of July 9, 2019, Senate Bill 33, became law without Governor Ige’s signature.  That measure increases the $35M spending ceiling to $50M per year.  This is a rolling credit which means that once we reach the aggregate $50M, filers can claim from the subsequent year.

 

20-25% MOTION PICTURE, DIGITAL MEDIA, & FILM PRODUCTION INCOME TAX CREDIT

This is a refundable tax credit based on a production company’s qualified Hawaii expenditures while producing a qualified film, television, commercial, or digital media project. The credit equals 20% of qualified production costs incurred on Oahu, and 25% on the neighbor islands (Big Island, Kauai, Lanai, Maui, Molokai).

Requirements to access the credit:
  • Register with the Hawaii Film Office/Department of Business, Economic Development & Tourism at least five business days PRIOR to the first Hawaii shoot date;
  • Meet the minimum in-state spending requirement of at least $200,000;
  • Make reasonable efforts to hire local talent and crew; and,
  • Provide evidence when making any claim for products or services acquired or rendered outside of Hawaii that reasonable efforts were unsuccessful to secure and use comparable products or services within the state.
  • Provide evidence of financial or in-kind contributions or educational or workforce development efforts toward the furtherance of the local film, television and digital media industries that is valued at 0.1% of the productions Hawaii Spend or $1000, whichever is greater.
  • All productions that file for the tax credit must secure a third-party review from qualified CPA firm using agreed-upon procedures prescribed by DBEDT.

The refundable production tax credit also includes the following:

  • A $50 million annual spending ceiling, but ACT 143 also provides that once the $50 million aggregate figure is reached that productions may claim from the subsequent year.
  • Per production credit cap of $15 million;
  • Qualifies certain productions with Internet-only distribution;
  • Allows State and County location and facilities fees as a qualified expenditure;
Qualified Spend: The qualified spend includes all in-state costs incurred by a qualified production that are subject to Hawaii State General Excise Tax (GET) or Income Tax.
  • Costs incurred for the use of state and county facilities and locations, although not subject to GET, will qualify for the incentive.
  • Government imposed fines, penalties, or interest incurred within Hawaii by the production do not qualify.
  • ALL banking fees, USPS postage expenditures  do not qualify.
  • Insurance premiums from out-of-state insurance companies, fees to obtain a third party review from out-of-state CPA firms (unless registered to do business in the State of Hawaii) do not qualify.

 

Overview & Instructions:

 

Previous Tax Information Releases (superceded by newly adopted Hawaii Administrative Rules) :

 

Required Forms:

Required Attachments for the Hawaii Production Report:

  • Detailed final Hawaii Expenditure Ledger showing all production expenditures incurred in the State of Hawaii.
  • Signed affidavit demonstrating that reasonable efforts were made to use comparable products or services within Hawaii before items were imported into the State.
  • Vendor list with total costs associated with each vendor or individual with current general excise tax (GET) license numbers for ALL vendors.
  • All loan-outs must be listed on separate loan-out list template (see forms below).
  • Complete payroll log (any production employee who is not on payroll with HI taxes withheld, must be registered to do business in the state, and have a GET license number).
  • Complete petty cash log (showing complete breakdown of petty cash payments and petty cash vendors).
  • Verification of Education/Workforce Development Contribution (contribution must be earmarked for digital media or performing arts program in Hawaii public or charter school).
  • Third-party verification review of your HPR and claim for this tax credit by a qualified tax professional or CPA using agreed upon procedures prescribed by DBEDT.  ACT 143 stipulates that ALL tax credit claimants must secure this independent third-party review regardless of production size.
  • Crew list with names and contact info.
  • End Credit Verification ( Screen Grab ) if available.

Budget/Expenditure Report Templates:

These templates provide an example of the level of detail required on the Hawaii expenditure reports you need to submit with your Hawaii Production Report.  All cost items, other than petty cash, must be associated with a specific vendor or individual’s name and include a General Excise Tax (GET) License number. Total costs paid to each vendor or individual must be included in required Vendor List form. Please use the Vendor List Template below. A separate Vendor List must be provided for all out-of-state vendors that provided imported goods or services (for which Use Tax must be paid). You may use your own budget/expenditure report formats as long as the detail provided is equivalent to the detail found in these templates.

Please note the multiple worksheets on different tabs in each document.

ROYALTIES TAX EXEMPTION

Royalties derived from performing arts products are excluded from a Hawaii taxpayer’s income and not subject to state income tax.

Overview & Instructions:

For further information, contact:

Phone: 808-587-1530

or

[email protected]