STAND. COM. REP. NO. 896
RE: S.B. No. 951
Honorable Ronald D. Kouchi
President of the Senate
Thirty-Second State Legislature
Regular Session of 2023
State of Hawaii
Your Committee on Ways and Means, to which was referred S.B. No. 951, S.D. 1, entitled:
"A BILL FOR AN ACT RELATING TO THE TAX CREDIT FOR RESEARCH ACTIVITIES,"
begs leave to report as follows:
The purpose and intent of this measure is to facilitate the administration of the tax credit for research activities.
Specifically, the measure:
(1) Limits to $1,500,000 the amount of tax credits for research activities that an eligible taxpayer and the taxpayer's related entities may receive per taxable year;
(2) Consolidates the survey and certification requirements for tax credits for research activities;
(3) Increases from $5,000,000 to $15,000,000 the annual aggregate cap on tax credits for research activities that the Department of Business, Economic Development, and Tourism may certify;
(4) Requires certification of the tax credits for research activities on a first-come, first-served basis to be based on the date that a complete application is received, subject to certain conditions; and
(5) Extends from December 31, 2024, to December 31, 2029, the sunset date for the tax credit.
Your Committee received written comments in support of this measure from High Technology Development Corporation and Makai Ocean Engineering, Inc.
Your Committee received written comments on this measure from the Department of the Attorney General, Department of Taxation, Tax Foundation of Hawaii, and Oceanit.
Your Committee finds that the tax credit for research activities makes the State competitive in the global technology industry. Your Committee believes that updating the statutory provisions relating to the tax credit, as proposed by this measure, will ensure that offering the tax credit continues to facilitate efforts to diversify the State's economy and promote job creation.
Your Committee has amended this measure by:
(1) Deleting the requirement that a high technology business shall maintain and operate a physical place of business in the State where at least seventy-five per cent of the business' employees are located;
(2) Inserting a definition of "small business", to mean "a company with no more than five hundred employees, including affiliates";
(3) Changing the effective date to July 1, 2050, to facilitate further discussion on the measure; and
(4) Making technical nonsubstantive changes for purposes of clarity, consistency, and style.
As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 951, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 951, S.D. 2.
Respectfully submitted on behalf of the members of the Committee on Ways and Means,
DONOVAN M. DELA CRUZ, Chair