Report Title:

Tax Credit; Small Business; High Technology

Description:

Provides a tax credit of an unspecified amount to small high- tech companies to encourage expansion.

HOUSE OF REPRESENTATIVES

H.B. NO.

686

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO SMALL BUSINESS HIGH TECHNOLOGY EMPLOYMENT TAX CREDIT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"235- Small business high technology employment tax credit. (a) There shall be allowed to each qualified taxpayer subject to the taxes imposed by this chapter a small business high technology employment tax credit that shall be deductible from the qualified taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the tax credit is taken. The tax credit shall be $ and may be taken only once during the taxpayer's lifetime for each company owned by the taxpayer.

(b) The tax credit shall be claimed against the taxpayer's net income tax liability for the taxable year. For the purpose of this section, "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter.

(c) If the tax credit under this section exceeds the taxpayer's income tax liability, the excess of the tax credit over liability may be used as a credit against the taxpayer's income tax liability in subsequent years until exhausted. Every claim, including amended claims, for a tax credit under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the tax credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the tax credit.

(d) Except for the gross revenue requirement under subsection (e)(1), if the qualified taxpayer no longer qualifies for the tax credit within five years after the tax credit is taken, the tax credit shall be recaptured. The recaptured amount shall be equal to per cent of the amount of the total tax credit claimed.

(e) As used in this section:

"Qualified research" means the same as defined in section 235-7.3 and includes business activities in alternate energy and digital networking.

"Qualified taxpayer" means an owner of a business whose principal place of business is in this State and that has:

(1) Annual gross revenue of not more than $          ;

(2) Hired a new full-time employee after July 1, 2003, who has not previously worked for any company including the company's affiliate or parent company that is owned, operated, or connected in any way with the qualified taxpayer; and

(3) More than fifty per cent of its total business activities dedicated to qualified research; provided that the business conducts more than seventy-five per cent of its qualified research in this State or more than seventy-five per cent of its gross income is derived from qualified research; and provided further that this income is received from:

(A) Products sold from, manufactured in, or produced in this State; or

(B) Services performed in this State.

(f) This section shall not apply to taxable years beginning after          .

(g) The director may adopt rules pursuant to chapter 91 to effectuate this section."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect on July 1, 2003 and shall apply to taxable years beginning after December 31, 2002.

INTRODUCED BY:

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