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Hawaii's Excise Tax
Hawaii does not have a sales tax, but Hawaii does have an excise tax. This tax is taxed on the total amount received from sales of products and services. (Yes, services are subject to the excise tax.)
If you are in business in Hawaii, then you must have an excise tax license.
The total amount received includes the amount of tax you charge the customer.
Someone purchases $100 services from you.
The excise tax is 4%, so you might think that the tax to collect from the customer and also to pay to the state would be $4, but that is incorrect.
If you collect $4 in tax from the customer, the $4 is added into the amount received so you have to pay tax on $104 which comes out a tax of $4.16 and if you charge the customer $4.16, then you have to pay tax on $104.16 which comes out to $4.17.
For sales on Oahu, there is a half percent county excise tax and again it's on the total amount received.
So for the $100 services and if you passed on the taxes to the customer, the total tax for state & county would be $4.71.
If you make sales on different islands or out of state, you need to keep straight which tax to charge which customers and what to pay in excise taxes.
The state collects the money for both state and county, so you don't need to fill out two different forms.
Depending upon how much sales you have, you may have to file monthly or quarterly or semi-annually.
Important thing is to BUDGET for that money you need to send in taxes.
Sales to federal government, state government, out-of-state and certain tax-free zones, are not taxed the excise tax, so those customers should not be charged excise tax. These amounts must still be kept track of as they must be reported on the excise tax form.
There is also a wholesale tax, if what you sell is to be resold by someone else then you pay 0.5% on what you sell to other businesses for them to resell. And if you purchase your merchandise from the mainland or anywhere outside of Hawaii, then you have to pay 0.5% import excise tax.