If enacted, HB149 would essentially amend Chapter 235 of the Hawaii Revised Statutes to mandate that all corporations subject to the state income tax include their foreign subsidiary incomes in their tax calculations. By applying the state's apportionment formula to determine the appropriate share of profits subject to tax, the bill aims to promote fairness and equity in corporate taxation. The expected outcome is an increase in revenue for the state, which has seen significant losses from corporate tax avoidance strategies in recent years.
Summary
House Bill 149 aims to address tax haven abuse by establishing more stringent requirements for corporate taxation in Hawaii. The bill requires corporations to report the income of all foreign subsidiaries, thereby reducing opportunities for tax avoidance through complicated schemes that shift income to offshore tax havens. The motivation behind this legislation is to recapture an estimated $38 million in annual tax revenue that Hawaii loses due to outdated tax reporting practices. The approach taken by the bill aligns with recommendations for worldwide combined reporting, which is seen as an effective method for closing tax loopholes.
Contention
Notable points of contention surrounding this bill include concerns from corporations about the increased tax burden and compliance burdens that may arise from the new reporting requirements. Proponents argue that the changes are necessary to ensure that all businesses pay their fair share of taxes and that most corporations employ these methods to maximize profits without contributing adequately to state revenues. Critics, however, fear that these measures could disproportionately impact smaller businesses that do not have the resources to navigate increased complexity in tax reporting.
Businesses: nonprofit corporations; ability of a hospital to convert from a county hospital to a nonprofit hospital; allow. Amends sec. 305a of 1987 PA 230 (MCL 331.1305a).