Hawaii Subjects Intangible Property to Use Tax

Intangible property is subject to Hawaii use tax at the rate of 4%. Hawaii levies the tax on the value of intangible property that is:

  • acquired from an unlicensed seller, and
  • imported or used in Hawaii.

Use tax accrues when the importer or purchaser acquires the property and it becomes subject to Hawaii’s taxing jurisdiction.

“Property” Includes Intangible Property

Hawaii amends the use tax definition of “property” to include intangible property.

However, the term “property” does not include:

  • securities;
  • commodities for future delivery and other tradable agreements, options, and rights;
  • evidence of indebtedness;
  • interests in land; or
  • dividends.

General Excise Tax Exemption Created

Intangible property used outside Hawaii is not subject to general excise tax.

Exemption Certificate Required

Purchasers must give the seller or licensor an exemption certificate, stating that the intangible property is to be used outside Hawaii. If the property is used in Hawaii, the purchaser must pay the tax to the seller or licensor on demand.

Act 183 (H.B. 2416), Laws 2018, effective July 10, 2018, and applicable to taxable years beginning after 2018

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All stories by: CCHTaxGroup