HRS § 209E-9 - Eligibility; qualified business; sale of property or services

(a) Any business firm may be eligible to be designated a qualified business for purposes of this chapter if the business: (1) Begins the operation of a trade or business in an eligible business activity within an enterprise zone; (2) During each taxable year has at least fifty per cent of its enterprise zone establishments' gross receipts attributable to the active conduct of trade or business within enterprise zones located within the same county; and (3) Either: (A) Increases its average annual number of full-time employees employed at the business' establishment or establishments within enterprise zones located within the same county by at least ten per cent by the end of its first tax year of participation, and during each subsequent taxable year at least maintains that higher level of employment; or (B) Increases its gross sales of agricultural crops produced, or agricultural products processed within enterprise zones located within the same county by two per cent annually. For business firms engaged in producing or processing agricultural products, receipts from value-added products made from crops grown within enterprise zones located within the same county and sold at retail pursuant to the limits of subsection (e) shall count toward the gross receipts requirement under paragraph (2). (b) A business firm may also be eligible to be designated a qualified business for purposes of this chapter if the business: (1) Is actively engaged in the conduct of a trade or business in an eligible business activity in an area immediately prior to the area being designated an enterprise zone; (2) Meets the requirements of subsection (a)(2); and (3) Either: (A) Increases its average annual number of full-time employees employed at the business' establishment or establishments within enterprise zones located within the same county by at least ten per cent by the end of the first year of operation, and by at least fifteen per cent by the end of each of the fourth, fifth, sixth, and seventh years of operation, and for businesses eligible for tax credits extending past the seventh year, at least maintains that higher level of employment during each subsequent taxable year; provided that the percentage increase shall be based upon the employee count at the beginning of the initial year of operation within the enterprise zone or zones; or (B) Increases its gross sales of agricultural crops produced, or agricultural products processed within enterprise zones located within the same county by two per cent annually. (c) After designation of an enterprise zone, each qualified business firm in the zone shall submit annually to the department an approved form supplied by the department that provides the information necessary for the department to determine if it may certify the applicability of the tax credits and exemptions provided in this chapter for the business firm. The approved form shall be submitted by each business to the governing body of the county in which the enterprise zone is located, then forwarded to the department by the governing body of the county. (d) The form referred to in subsection (c) shall be prima facie evidence of the eligibility of a business for the purposes of this section. (e) Tangible personal property shall be sold at an establishment of a qualified business within an enterprise zone and the transfer of title to the buyer of the tangible personal property shall take place in an enterprise zone located within the same county in which the tangible personal property is sold. Services shall be sold at an establishment of a qualified business engaged in a service business within an enterprise zone. (f) For any fiscal year that includes September 11, 2001, a business may use its average annual number of full-time employees as of August 31, 2001--rather than its average annual number at the end of its fiscal year including September 11, 2001--if necessary to meet the requirements of subsection (a)(3) and (4) or (b)(3). A business may also use its average annual number of full-time employees at the end of its fiscal year that includes September 11, 2001, as its base number of full-time employees if necessary to meet the requirements of subsection (a)(3) and (4) or (b)(3) in future fiscal years. [L 1986, c 78, pt of §1; am L 1989, c 390, §4; am L 1995, c 91, §5; am L 1996, c 286, §2; am L 1997, c 262, §3; am L 2000, c 118, §3; am L 2002, c 146, §2; am L 2008, c 143, §4; am L 2009, c 174, §4]