June 7, 2000

RE: Act 118, Session Laws of Hawaii 2000 (Act 118), Relating to State Enterprise Zones

Act 118  (S.B. No. 2779, S.D. 1, H.D. 2, C.D. 1) expands and clarifies the enterprise zone law and became effective on May 22, 2000.

Certain incentives are available to a "qualified business" in an enterprise zone.  A qualified business is exempt from the general excise tax for seven years on the gross proceeds from the manufacture of tangible personal property, the wholesale sales of tangible personal property, or the engaging in a service business.  The use tax is not applicable to purchases by the qualified business.  The qualified business also may claim credits, which are reduced over the course of seven years, against the state income tax and for unemployment taxes paid.  Hawaii Revised Statutes (HRS) §§ 209E-10, 209E-11.  A county may propose incentives, including reduction of permit fees, reduction of user fees, reduction of real property taxes, and regulatory flexibility in the areas of special zoning districts, permit processing, and exemptions from local ordinances.  HRS § 209E-12.

Act 118 allows additional businesses to qualify for these incentives:

Forms and other tax information are available at the Department's website at:

On Oahu, forms may be ordered by calling the Department's Forms Request Line at:   808-587-7572.  Persons who are not calling from Oahu, may call:  1-800-222-7572 (toll-free) to receive forms by mail or 808-678-0522 from a fax machine to receive forms by fax.

Director of Taxation

HRS Sections Explained:  HRS Section 209E-2, 209E-9, 209E-11