Hawaii ~ Corporate, Personal Income Taxes: Motion Picture, Digital Media, and Film Production Credit Provisions Amended

For taxable years beginning after December 31, 2018, the Hawaii corporate income and personal income tax provisions allowing a credit for a percentage of the motion picture, digital media, and television film production costs incurred in Hawaii have been amended to:

— extend the sunset date for the current version of the credit provisions to January 1, 2026 (previously, 2019), at which time the provisions will be reenacted in the form in which they read prior to July 1, 2006;

— establish an annual aggregate cap on the tax credit of $35,000,000 and allow a taxpayer to claim all or part of the credit in subsequent years if the cap has been reached in the year the taxpayer was eligible to claim the credit (provided that no excess will be allowed to be claimed after December 31, 2025);

— clarify that a production must provide the state a qualified Hawaii promotion;

— require a taxpayer making any claim for products or services acquired or rendered outside of the state to provide evidence that reasonable efforts were unsuccessful to secure and use comparable products or services within the state;

— require a taxpayer claiming the credit to submit a verification review by a qualified certified public accountant using procedures prescribed by the Department of Business, Economic Development, and Tourism (DBEDT); and

— delete the provision stating that failure to prequalify a production for the credit may constitute a waiver of the right to claim the credit.

Also, no later than January 1, 2018, and each January 1 thereafter, each film production that has production expenditures of $1,000,000 or more and that is claiming the credit must obtain an independent third party certification of qualified production costs eligible for the credit in the form of a tax opinion for submission to the DBEDT.

In addition, the DBEDT is required to:

— submit an annual report on the activities and expenditures of the credit to the Legislature no later than 20 days prior to the convening of each regular session until the credit expires; and

— beginning January 1, 2018, collaborate with the Department of Taxation and submit an annual report to the governor and the Legislature on the jobs created by, and the fiscal impact to the state of, those productions receiving the credit.

Act. 143 (H.B. 423), Laws 2017, effective December 31, 2018, and applicable as noted

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