July 12, 2000

RE: Act 195, Session Laws of Hawaii 2000 (Act 195),
Relating to the Hotel and Construction Remodeling Tax Credit and Tax Exemptions for the Call Center Industry

Act 195 provides tax incentives for the construction and renovation of hotel facilities, including hotel condominiums and time share plans; and the call center industry.

Hotel and Construction Remodeling Tax Credit
Act 195 provides a refundable four percent income tax credit for tax years 1999 through 2002.

The credit is applicable to the "construction or renovation costs" for a "qualified hotel facility" of a taxpayer subject to the net income tax under chapter 235, Hawaii Revised Statutes (HRS), and the transient accommodations tax under chapter 237D, HRS, including an association of apartment owners or timeshare association.  The credit must be claimed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed.  A taxpayer claiming the credit may reduce the basis of property by the amount of the credit allowable and claimed under Act 195 or treat the credit as taxable income.

Tax Exemptions for the Call Center Industry
Act 195 exempts the amounts received by a telecommunications common carrier from a person operating a call center from the general excise tax (GET), Chapter 237, HRS, and the public service company (PSC) tax, Chapter 239, HRS.  The gross income received by a call center for customer services and support is also exempt from the GET.

The GET provisions apply to gross income or gross proceeds received beginning July 1, 2000 and before July 1, 2010.

The PSC provisions for fiscal year taxpayers apply to fiscal years beginning July 1, 2001 through July 1, 2010 filings (gross income for fiscal years ending June 30, 2001 through fiscal years June 30, 2010).  As to calendar year taxpayers, these provisions are applicable to 2002 through 2011 filings (gross income for calendar years 2001 through 2010).

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 Sections 235-___, 237-___, and 239-___.