Statutes, codes, and regulations
Hawaii Administrative Rules
Title 15 - DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT AND TOURISMDepartment of Business, Economic Development and TourismChapter 6 - ENTERPRISE ZONES
Subchapter 3 - DESIGNATION OF A BUSINESS AS A QUALIFIED BUSINESS; CERTIFICATION BY THE DEPARTMENT
Section 15-6-14 - Sale of services

Haw. Code R. § 15-6-14

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Current through November, 2024
Section 15-6-14 - Sale of services
(a) Services must be sold and delivered at an establishment of a qualified business engaged in a service business as defined in this chapter, within an enterprise zone within the same county. Where the service business, in the same transaction, engages in both the sale of tangible property and services, the service business shall segregate the sale of services that are exempt under chapter 209E, HRS, from all non-exempt transactions, including the sale of services or of tangible personal property. The service business shall sustain the burden of proving the segregation was properly made. If the service business fails to sustain the burden, the entire transaction shall be subject to the general excise tax.
(b) The application of this section is illustrated in the following examples:

Example 1:

ABC Ship Repair is located in an area designated as an enterprise zone. ABC provides servicing and repair work on ships. ABC provides these services for customers who bring their ships to ABC's place of business. All of ABC's gross receipts are derived from services that are sold and delivered within the zone. Accordingly, ABC will qualify for the income tax credits and general excise tax exemption.

Example 2:

Assume the same facts as in Example 1, except that ABC Ship Repair also repairs ships in an area that is not in an enterprise zone in the county in which ABC is registered in. ABC will have to apportion income received from each type of sale and claim income tax credits and the general excise tax exemption only for services performed within the zones within the same county it is registered in.

Example 3:

Assume the same facts as in Example 2, except that ABC Ship Repair also rents tools that it owns, or alternatively sells specialized tools at retail to customers. ABC Ship Repair will not qualify for the income tax credits and general exercise exemption on these sales as the rental of tools or the sale of tools at retail is not an eligible activity of ABC Ship Repair.

Haw. Code R. § 15-6-14

[Eff 11/3/90; am and comp2/28/2015] [Auth: HRS § 209E-8) (Imp: HRS § 209E-9)