Relating To The Tax Credit For Research Activities.
The restructured tax credit aims to stimulate research and development efforts within qualified high technology businesses across Hawaii. By extending and modifying tax credit provisions, this bill is designed to encourage local businesses to invest in research activities. The bill also consolidates survey and certification requirements, thus making it easier for eligible businesses to claim credits while enhancing the efficacy of tax credit administration by the Department of Business, Economic Development, and Tourism (DBEDT). It extends the sunset date for tax credits from December 31, 2024, to December 31, 2029.
Senate Bill 951 focuses on amending the provisions relating to tax credits for research activities in Hawaii. It specifically updates Section 235-110.91 of the Hawaii Revised Statutes to allow qualified high technology businesses to claim an income tax credit based on the federal tax credit for increasing research activities, as outlined in section 41 of the Internal Revenue Code from December 31, 2011. The bill ensures that tax credits are deductible from the taxpayer's net income tax liability for each relevant taxable year and establishes a cap of $1.5 million per taxable year for each qualified high technology business and its related entities.
The overall sentiment surrounding Senate Bill 951 appears to be supportive, particularly among those in the high technology sector and local businesses seeking to leverage these tax incentives for growth. Proponents argue that the tax credit will promote innovation and job creation in the state. However, there may be concerns about the sustainability and long-term implications of tax credits, particularly regarding effective monitoring and the potential for system abuses. The debate reflects a broader conversation about balancing state support for industry growth with responsible tax policy.
Notable points of contention arise from the cap placed on tax credits, which some may view as restrictive, limiting the amount available for companies heavily engaged in research. Additionally, the bill's dependence on federal tax stipulations means businesses must navigate both state and federal regulations to maximize their benefits. The competitive nature of claiming credits on a first-come, first-served basis also raises questions about equity among businesses, especially smaller enterprises that may lack the resources to navigate the complex application process as efficiently as larger firms.