HB759 would change Hawaii’s corporate income tax reporting and apportionment rules to address what the bill describes as tax haven abuse and profit shifting. Beginning January 1, 2026, corporations subject to Hawaii’s corporate income tax would be required to file a copy of federal IRS Form 5471 with the Department of Taxation, report income from foreign subsidiaries, and have that income treated as business income subject to Hawaii’s apportionment formula. The bill also requires corporations to submit state-by-state reporting on profits, losses, revenues, inter-company transactions, and taxes paid in other states.
The bill further establishes a Corporate Tax Law Task Force within the Department of Taxation to review Hawaii’s corporate tax laws annually, identify loopholes, and recommend updates. The task force would be led by the director of taxation or designee and the chair of the Council on Revenues or designee, and would report recommendations to the Legislature before each regular session starting in 2026. The bill takes effect upon approval, with the reporting provisions delayed until January 1, 2026.
Impact
HB759 would amend Hawaii Revised Statutes chapter 235 by adding new corporate reporting and apportionment requirements, and chapter 231 by creating a new advisory task force. Its practical effect would be to expand the information corporations must provide to the Department of Taxation and to potentially increase taxable corporate income by including foreign subsidiary income in the state tax base. Revenue generated from the apportioned income would be deposited into the state general fund, and the task force could lead to future legislative changes affecting corporate tax administration and nexus/apportionment rules.
Sentiment
The bill appears to be framed positively by its sponsors as a revenue and transparency measure, with findings emphasizing post-pandemic revenue growth, corporate tax avoidance, and the need to close loopholes. The available record shows no committee transcripts or recorded votes, so there is no documented floor or committee debate in the provided materials. Based on the bill text and report description, the overall tone is pro-enforcement and pro-revenue, with an emphasis on fairness and alignment with federal reporting practices.
Contention
The main point of contention likely concerns the bill’s expansion of corporate tax reporting and the inclusion of foreign subsidiary income in Hawaii’s tax base, which could be viewed by affected corporations as increasing compliance burdens and tax liability. Supporters would likely argue that the measure closes loopholes, improves transparency, and recovers revenue lost to offshore tax planning, while opponents may question the economic impact, administrative complexity, and whether Hawaii should adopt worldwide combined reporting-style rules. No specific objections or amendments are documented in the provided committee materials.