Relating To The Tax Credit For Research Activities.
The bill introduces various regulations, including caps on tax credits available to qualified businesses. Each qualifying business is limited to no more than $1.5 million in tax credits per taxable year, which aims to facilitate a fair distribution of benefits among participating businesses. This cap, along with the first-come, first-served certification process, is designed to enhance the management and efficacy of tax credits in fostering research activities and technological advancements within the state.
House Bill 1193 is a legislative effort to amend the tax credit provisions for research activities under the Hawaii Revised Statutes. The bill seeks to provide an income tax credit for qualified high technology businesses, equal to the credit available under Section 41 of the Internal Revenue Code, applicable to research activities. A significant aspect of this bill is ensuring that the federal tax provisions in Section 41, as they existed on December 31, 2011, remain in effect for the purposes of state income tax determinations, thereby supporting local businesses involved in innovation and development.
The general sentiment surrounding HB 1193 appears to be supportive among stakeholders in the high technology sector, as it incentivizes investment in research and development. However, there may be concerns regarding the cap on credits, as businesses may fear it limits their potential to fully benefit from the tax credits. Moreover, the requirement for businesses to be registered in Hawaii and to claim a federal tax credit adds layers of compliance, which can be seen as challenging for some firms.
Notable points of contention within the bill include the criteria for qualifying for the tax credit, such as the submission of surveys and substantial documentation to support claims. The expectation that businesses disclose considerable operational data might raise apprehensions about privacy and administrative burden. Additionally, the sunset provision extending the expiration of the tax credit to December 31, 2029, could lead to debates on whether such long-term incentives align with the state's broader fiscal strategy.