Report Title:

General Excise Tax; Exemption; Public Internet Data Centers

Description:

Restricts the GET exemption for public internet data centers only to the revenue generated by the internet data center.

THE SENATE

S.B. NO.

834

TWENTY-SECOND LEGISLATURE, 2003

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO HIGH TECHNOLOGY BUSINESSES.

 

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

 

SECTION 1. The legislature finds that the results of recent legislation supporting the high-technology industry have not all been positive. A case in point is the general excise tax exemption that assists public internet data centers which provide a variety of computer capabilities and services to the public.

The legislature further finds that some data centers were formed for purposes other than servicing the public. These data centers were formed by financially troubled companies for the sole purpose of transferring the tax exemption that was intended for the data centers back to its parent company.

The purpose of this Act is to prevent the misuse of tax exemptions intended for public internet data centers by restricting the use of the tax exemption to revenues generated by the data centers.

SECTION 2. Section 237-29.65, Hawaii Revised Statutes, is amended to read as follows:

"[[]§237-29.65[]] Exemption for public [Internet] internet data centers. (a) This chapter shall not apply to the gross income or gross proceeds received by a public [Internet] internet data center[.]; provided that the tax exemption under this section:

(1) May not be taken or transferred to a parent, affiliate, or any other company; and

(2) Shall apply only to gross income or gross proceeds received by the public internet data center.

(b) As used in this section:

"Compensated use by the public" means use of equipment, maintenance of equipment, and rental of space in a public [Internet] internet data center.

"Public [Internet] internet data center" means a facility available for compensated use by the public and designed to:

(1) House data servers;

(2) Operate on a twenty-four-hour, seven-day-a-week basis;

(3) Have redundant systems for electricity, air conditioning, fire suppression, and security; and

(4) Provide services such as bandwidth, co-location, data backup, complex web hosting, and aggregation for application service providers.

(c) The director may adopt rules pursuant to chapter 91 to identify any misuse or abuse of this section and may adopt rules, including penalties, necessary to prevent such misuse or abuse.

[(c)] (d) This section shall apply to gross income or gross proceeds received after June 30, 2001, but not after December 31, 2005."

SECTION 3. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2002.

INTRODUCED BY:

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