Hawaii – Changes to the Application of Tax on Imported Contracting

SALT Report 2836 – The Hawaii Department of Taxation issued guidance regarding Act 46 which amended Hawaii Revised Statutes §§238-1 and 238-2.3, to provide for the consistent treatment of imported contracting provisions under the State’s use tax and general excise tax laws.

Under the provisions of Act 46, use tax will not be imposed when a licensed contractor imports or purchases contracting and that contracting becomes an identifiable element of a finished work or project, provided that:

  • The gross proceeds derived by the contractor are subject to general excise tax as contracting, and
  • The contractor could have deducted the amounts paid to the subcontractor if the subcontractor was subject to general excise tax

These provisions were effective July 1, 2013.

For Further Information

Hawaii Department of Taxation – Announcement No. 2013-10