Hawaii Tax Will Impact Non-Hawaii Businesses
The Hawaii Governor signed Senate Bill 394, enacting market-based sourcing for purposes of the Hawaii income tax that applies to services and intangibles. The new sourcing provisions apply to taxable years beginning after Dec. 31, 2019.
Under market-based sourcing, a receipt is attributed to the state where the benefit of the service is received by the customer. Therefore, a service provider who provides work in CA for a Hawaii client will now need to report this sale to Hawaii