Act 173 reduces the effect of the "pyramiding" of the general excise tax (GET) by clarifying that (1) sales to persons licensed under the GET law of single-serving packets of condiments furnished to customers are subject to the .5% wholesale rate; (2) sales of tangible personal property to persons licensed under the GET law who incorporate or process the property into a finished product and resell the property at retail (including, disposable containers, packages or wrappers to hold food) are subject to the .5% wholesale rate; and (3) the .5% intermediary services rate is applicable to professional services.1 Act 173 applies to gross receipts received after June 30, 1999.
Act 173 also reverses Hawaii Administrative Rules (HAR) section 18-237-4-01.01 which did not allow the .5% wholesale rate for sales to an eating or drinking retailer of single-serving packets of condiments, unless the packets are resold for a separate charge.2
Forms and other tax information may be downloaded from the Department's website at: http://www.state.hi.us/tax/tax.html. On Oahu, forms may be ordered by calling the Department's Forms Request Line at: 587-7572. Persons who are not calling from Oahu may call: 1-800-222-7572 to receive forms by mail or 808-678-0522 from a fax machine to receive forms by fax.
/s/
RAY K. KAMIKAWA
Director of Taxation
1 Pyramding occurs because the GET is levied on almost all receipts of a business at each transaction in the economic chain. Thus, the GET accumulates as property or service passes through the economic chain.
2 HAR section 18-237-4-01.01 will be amended to conform to Act 173.