RE: Act 160, Session Laws of Hawaii 2000 (Act 160), Relating to Wind Farms
Act 160 expands the definition of "qualified business" under the enterprise zone law, and became effective on June 5, 2000.
Certain incentives are available to a "qualified business" in an enterprise zone. A qualified business is exempt from the general excise tax (GET) for seven years on the gross proceeds from the manufacture of tangible personal property, the wholesale sales of tangible personal property, or the engaging in a service business. The use tax is not applicable to purchases by the qualified business. The qualified business also may claim credits, which are reduced over the course of seven years, against the state income tax and for unemployment taxes paid. Hawaii Revised Statutes (HRS) §§ 209E-10, 209E-11. A county may propose incentives, including reduction of permit fees, reduction of user fees, reduction of real property taxes, and regulatory flexibility in the areas of special zoning districts, permit processing, and exemptions from local ordinances. HRS § 209E-12.
Act 160 allows a wind farm producing electric power from wind energy for sale to a public utility company that resells the electric power to the public to qualify for some of these incentives.
The GET and use tax exemption, however, will not be applicable to a
wind farm. A wind farm producing electric power from wind energy
and selling to a public utility company is not manufacturing
tangible personal property, selling tangible personal property, or engaging
in a service business. Thus, a wind farm will be limited to enterprise
zone State income and unemployment tax credits and will be subject to the
GET as a producer at the 0.5 percent rate under HRS § 237-13.5, relating
to the sale of electric power to the public utility.
Forms and other tax information are available at the Department's website at: www.state.hi.us/tax.
On Oahu, forms may be ordered by calling the Department's Forms Request
Line at: 808-587-7572. Persons who are not calling from
Oahu, may call: 1-800-222-7572 (toll-free) to receive forms by mail
or 808-678-0522 from a fax machine to receive forms by fax.
RAY K. KAMIKAWA
Director of Taxation
HRS sections Explained: HRS § 209E-10, 209E11, and 209E-12.