Relating To Tax Credit For Research Activities.
One of the notable features of this bill is the establishment of a cap on the total amount of tax credits that can be claimed by each qualified high technology business. Each entity, along with its related entities, can claim a maximum of $1,000,000 in tax credits per taxable year. This cap aims to manage the fiscal impact of the tax credits on the state budget while still providing substantial support for businesses engaged in research activities.
House Bill 990 aims to amend the existing tax credit provisions for research activities in Hawaii. It specifically modifies Section 235-110.91 of the Hawaii Revised Statutes to align state tax credits for research activities with federal guidelines, particularly sections outlined in the Internal Revenue Code as they were enacted on December 31, 2011. The bill intends to simplify the claiming process for qualified high technology businesses by allowing them to receive state income tax credits equal to those available at the federal level for research efforts, provided they also claim the corresponding federal credit.
HB990 is expected to enhance the economic landscape in Hawaii by almost incentivizing high technology businesses to invest in research within the state. By adhering closely to federal standards, it positions Hawaii to better leverage federal resources while also keeping local businesses competitive. The effectiveness of this bill will depend on the state's administrative capacity to implement its provisions and provide the necessary support to those applying for tax credits.
The bill consolidates survey and certification requirements and mandates that certified statements regarding expenditures for qualified research must be submitted to the Department of Business, Economic Development, and Tourism. The requirement to submit detailed records of expenditures and employment data aims to facilitate the assessment of the effectiveness of the tax credit program. However, there are concerns from various stakeholder groups regarding whether the measures are stringent enough or if they may inadvertently limit smaller businesses from benefiting, as the reporting requirements may be burdensome.