Incentives & Tax Credits
- NEW – Act 217 (effective Jan 1, 2023) Hawaii Revised Statutes §235-17 (GM1318)
- NEW – Tax Advisory – 2022 (12-23-22) (Any taxpayer claiming the tax credit must provide this advisory to all persons involved in the production who conduct activities in Hawaii as an employee, vendor, independent contractor or loan-out company if they do not have an active General Excise Tax (GET) license.)
- Make Loan-out GET Withholding payments here – Hawaii Tax Online: Department of Taxation | State of Hawaii.
- Loan-out GET Withholding payment website instructions: Loan-out Withholding GET Payment Website Instructions
On November 7, 2019, Governor David Ige signed and adopted new Hawaii Administrative Rules (HAR) relating to the Motion Picture, Digital Media, and Film Production Income Tax Credit. These new Rules, which took effect on November 17, 2019, supersedes the previously issued film credit guidance.
IMPORTANT UPDATE: HRS section 235-17 was amended by ACT 217- GM 1318 (effective Jan 1, 2023) these amendments supersede all previous guidance. See amendments here: ACT 217 GM1318_.PDF (hawaii.gov)
- NEW – Act 217 (effective Jan 1, 2023) Hawaii Revised Statutes §235-17 (GM1318)
- Hawaii Administrative Rules (HAR) Motion Picture, Digital Media, and Film Production Income Tax Credit
- Tax Information Release (TIR) 2021-01 (2-16-2021) RE: General Excise Tax (GET) Imposition on the Film Industry
- Act 143 (effective January 1, 2019) Hawaii Revised Statutes §235-17
- §235-17 Hawaii Revised Statutes amended by Act 143 and Act 275
Previous Tax Information Releases (superseded by newly adopted and amended Hawaii Administrative Rules):
- Tax Information Release (TIR) 2019-04 (REVISED 12-19-19)– Agreed Upon Procedures (AUP) for Mandatory Verification Review (Does not apply to filers who apply on or after Jan 1, 2023.)
- Tax Information Release (TIR) 2019–01
- Table of Contents – (TIR) 2019-01
IMPORTANT NOTICE TO ALL TAX CREDIT APPLICANTS AND CLAIMANTS:
The Hawaii Department of Taxation has issued a new Tax Advisory 2023 (12-23-22.)
Please review the above documents carefully before registering for the tax credit.
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.
22-27% 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 22% of qualified production costs incurred on Oahu, and 27% on the neighbor islands (Big Island, Kauai, Lanai, Maui, Molokai).
UPDATE: The tax credit rate has increased to 22% on qualified production costs incurred on Oahu, and 27% on the neighbor islands (Big Island, Kauai, Lanai, Maui, Molokai) for filers who register for the tax credit on or after January 1, 2023
- Register to do business in the State of Hawai’i;
- Register with the Hawaii Film Office/Department of Business, Economic Development & Tourism at least seven days PRIOR to the Start (first day) of Principal Photography (SOPP) in Hawai’i;
- Meet the minimum in-state spending requirement of at least $100,000;
- Make reasonable efforts to hire local talent and crew Hawaii Film Office | Crew & Talent;
- Every person making a payment to a loan-out company and claiming a tax credit to deduct and withhold GET in an amount equal to the highest rate of tax plus any applicable county surcharge for all payments made to the loan-out company for services performed in the state;
- Provide evidence when making any claim for products or services acquired or rendered outside of Hawai’i that reasonable efforts were unsuccessful to secure and use comparable products or services within the state.
- Requires each taxpayer (filer) claiming the motion picture, digital media, and film production income tax credit to submit a fee in an amount equal to 0.2 % of the tax credit claimed by the qualified production;
- 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 Hawai’i Spend or $1000, whichever is greater.
Note: Productions registered after Jan 1, 2023 are no longer required to secure a Verification (AUP) Review, but we do encourage it for filings with over $1M in qualified production costs.
The refundable production tax credit also includes the following:
- $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.
- $17 million per production credit cap (applies to productions registered in 2023 CY or after);
- Qualifies certain productions with Internet-only distribution;
- Allows State and County location and facilities fees as a qualified expenditures;
- Costs incurred for the use of state and county facilities and locations, although not subject to GET, do qualify for the incentive.
- Insurance premiums from out-of-state insurance companies, fees to obtain a verification review from out-of-state CPA firms (unless registered to do business in the State of Hawai’i) do not qualify.
- Government imposed fines, penalties, or interest incurred within Hawai’i by the production do not qualify.
- ALL banking fees, USPS postage expenditures do not qualify.
Overview & Instructions:
- Overview & Instructions 22-27% Tax Credit
- Also refer to:
Required Forms (Request a ‘secured’ email from [email protected] prior to sending in any forms or documents):
- PRE-PRODUCTION REGISTRATION FORM (PRF) 22-27% TAX CREDIT(fillable.pdf) – Due at least seven days prior to first Hawai’i shoot date.
- PRE-PRODUCTION REGISTRATION FORM (PRF) SPLIT YEAR 22-27% TAX CREDIT(fillable.pdf) – Due at least seven days prior to first Hawaii shoot date.
- HAWAII PRODUCTION REPORT (HPR) 22-27% TAX CREDIT (fillable.pdf)- Due no later than 90 days following the end of each calendar year in which qualified production costs were expended.
Required Attachments for the Hawai’i Production Report:
- Detailed final Hawai’i Expenditure Ledger showing all production expenditures incurred in the State of Hawaii.
- Signed Sworn Statement identifying qualified production costs incurred during the calendar year.
- Crew List with names and contact info.
- Vendor list with total costs associated with each vendor or individual and active General Excise Tax (GET) license numbers for ALL vendors. (See forms below)
- Loan Out List with total costs associated with each loan out company and active General Excise Tax (GET) license numbers for ALL loan out companies. (For productions registered on or after Jan 1,2023, you will also submit proof of GET withholding payments on behalf of loan outs.)
- Payroll log (any production employee who is not on payroll and without HI income taxes withheld, must be registered to do business in the state, and have a GET license number).
- 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).
- End Credit Verification (screen grab) if available. And the Final Product and/or EPK.
- Use Tax List (if applicable) with total costs associated with each vendor and documentation that use tax was paid (via Forms G-45/49.) (See forms below).
- Signed Use Tax Sworn Statement demonstrating that reasonable efforts were made to use comparable products or services within Hawaii before items were imported into the State.
- Verification Review of your HPR and claim, for this tax credit, conducted by a Qualified CPA using agreed upon procedures prescribed by DBEDT. (This does not apply to productions registered on or after Jan 1, 2023.)
Expenditure Report Templates:
These templates provide an example of the level of detail required on the Hawaii expenditure reports (aka Expense Ledger) you need to submit with your Hawai’i Production Report (HPR.) You may use your own expenditure report formats as long as the detail provided is equivalent to the detail found in these templates. All cost items must be associated with a specific vendor or individual’s name and include a General Excise Tax (GET) License number.
Please use the Vendor List Template below. Total costs paid to each vendor or individual must be included in required Vendor List form. Vendor List must account for all In-State vendors (tab 1) and any Out-of-State vendors (tab 2) with their active GET license numbers.
Please use the Use Tax (Imported Goods) List Template below. List must account for any qualified out-of-state vendors that provided imported goods or services (for which Use Tax must be paid.)
Please note the multiple worksheets on different tabs in each document.
ROYALTIES TAX EXEMPTION
Royalties derived from performing arts products are excluded from a Hawai’i taxpayer’s income and not subject to state income tax.
For further information, contact:
Phone: 808-586-2570 or [email protected]
Phone: 808-587-1530 or [email protected]