HOUSE OF REPRESENTATIVES

H.B. NO.

423

TWENTY-NINTH LEGISLATURE, 2017

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

RELATING TO FILM AND DIGITAL MEDIA INDUSTRY DEVELOPMENT.

 

 

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

 


     SECTION 1.  The legislature finds that the film industry in Hawaii is an important component of a diversified economy.  The legislature also finds that the motion picture, digital media, and film production income tax credit has been effective in stimulating the economy and creating quality jobs in a clean industry, while promoting Hawaii as a visitor destination.

     The legislature further finds that the film production process can extend over several years due to extensive planning and development in the preproduction stage.  The motion picture, digital media, and film production income tax credit's current sunset date of January 1, 2019, will discourage new productions that may be in the development and preproduction phases at that point in time.

     The legislature further finds that extending the motion picture, digital media, and film production income tax credit for an additional five years will provide stability and economic incentive predictability for the film industry.  The legislature believes that the extension would enable Hawaii to remain competitive, and comparable to other jurisdictions, in attracting qualified productions that generate additional revenue, jobs, and tourism marketing exposure.

     The purpose of this Act is to amend the motion picture, digital media, and film production income tax credit by:

     (1)  Providing an additional credit amount for qualified production costs in a county with a population of seven hundred thousand or less, provided that certain hiring criteria are met;

     (2)  Requiring the taxpayer to verify the county of residence of local hires; and

     (3)  Extending the repeal of the credit until January 1, 2024.

     SECTION 2.  Section 235-17, Hawaii Revised Statutes, is amended as follows:

     1.  By amending subsection (a) to read:

     "(a)  Any law to the contrary notwithstanding, there shall be allowed to each taxpayer subject to the taxes imposed by this chapter, an income tax credit that shall be deductible from the taxpayer's net income tax liability, if any, imposed by this chapter for the taxable year in which the credit is properly claimed.  The amount of the credit shall be:

     (1)  Twenty per cent of the qualified production costs incurred by a qualified production in any county of the State with a population of over seven hundred thousand; [or]

     (2)  Twenty-five per cent of the qualified production costs incurred by a qualified production in any county of the State with a population of seven hundred thousand or less[.]; or

     (3)  Thirty-five per cent of the qualified production costs incurred by a qualified production in any county of the State with a population of seven hundred thousand or less; provided that:

         (A)  At least fifty-five per cent of the production's crew shall be hired from the county in which the qualified production costs are incurred; and

         (B)  This requirement shall not apply to hired individuals who principally add to the creative direction, process, voice, and narrative of the production, including the screenwriter, producer, and on-camera, microphone, or voice-over talent.

A qualified production occurring in more than one county may prorate its expenditures based upon the amounts spent in each county, if the population bases differ enough to change the percentage of tax credit.

     In the case of a partnership, S corporation, estate, or trust, the tax credit allowable is for qualified production costs incurred by the entity for the taxable year.  The cost upon which the tax credit is computed shall be determined at the entity level.  Distribution and share of credit shall be determined by rule.

     If a deduction is taken under section 179 (with respect to election to expense depreciable business assets) of the Internal Revenue Code of 1986, as amended, no tax credit shall be allowed for those costs for which the deduction is taken.

     The basis for eligible property for depreciation of accelerated cost recovery system purposes for state income taxes shall be reduced by the amount of credit allowable and claimed."

     2.  By amending subsection (h) to read:

     "(h)  Every taxpayer claiming a tax credit under this section for a qualified production shall, no later than ninety days following the end of each taxable year in which qualified production costs were expended, submit a written, sworn statement to the department of business, economic development, and tourism, identifying:

     (1)  All qualified production costs as provided by subsection (a), if any, incurred in the previous taxable year;

     (2)  The amount of tax credits claimed pursuant to this section, if any, in the previous taxable year; and

     (3)  The number of total hires versus the number of local hires by category and by county[.]; provided that the taxpayer shall verify the county of residence of local hires.

This information may be reported from the department of business, economic development, and tourism to the legislature in redacted form pursuant to subsection (i)(4)."

     SECTION 3.  Act 88, Session Laws of Hawaii 2006, as amended by Act 89, Session Laws of Hawaii 2013, is amended by amending section 4 to read as follows:

     "SECTION 4. This Act shall take effect on July 1, 2006; provided that:

     (1)  Section 2 of this Act shall apply to qualified production costs incurred on or after July 1, 2006, and before January 1, [2019;] 2024; and

     (2)  This Act shall be repealed on January 1, [2019,] 2024; and section 235-17, Hawaii Revised Statutes, shall be reenacted in the form in which it read on the day before the effective date of this Act."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval.

 

INTRODUCED BY:

_____________________________

 

 



 

Report Title:

Film; Digital Media Industry; Tax Credit

 

Description:

Amends the Motion Picture, Digital Media, and Film Production Income Tax Credit by providing an additional credit amount for qualified production costs in a county with a population of 700,000 or less, provided that certain hiring criteria are met; requiring the taxpayer to verify the county of residence of local hires; and extending the repeal of the credit until January 1, 2024.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.