This announcement is in response to recent inquiries from multistate taxpayers regarding the application of the Hawaii net income tax to dividends, interest, royalties, and gains received from a foreign corporation. This announcement confirms that a multistate taxpayer must include dividends, interest, royalties, and gains received from a foreign corporation in its business income that is subject to apportionment.
On November 25, 1994, the Department promulgated rules relating to the allocation and apportionment of business income for multistate taxpayers. See Hawaii Administrative Rules (HAR) sections 18-235-21-01 to 18-235-38.5-02. Under section 18-235-38.5-02(b)(2), HAR, a multistate taxpayer is required to include dividends, interest, royalties, and gains received from a foreign corporation in arriving at business income subject to apportionment. Section 18-235-38.5-02(b)(2), HAR, provides that:
If you have any questions regarding this Announcement, please call Iris Kitamura, Administrative Rules Specialist, at 808-587-1570. 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 808-587-7572. 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.
RAY K. KAMIKAWA
Director of Taxation
2 For recent changes in the Department's administratiion of section 235-7(c), HRS, please reference Department of Taxation Announcement 98-5.