Report Title:

Income Tax Credit; Motion Picture, Digital Media, and Film Production

Description:

Requires 75% local hire to qualify for the motion picture, digital media, and film production tax credit and excludes media productions from the definition of "qualified high technology business".

HOUSE OF REPRESENTATIVES	H.B. NO.	2266
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO TAX CREDITS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 235-7.3, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

     "(c)  For the purposes of this section:

     "Performing arts products" means:

     (1)  Audio files, video files, audiovideo files, computer animation, and other entertainment products perceived by or through the operation of a computer; and

     (2)  Commercial television and film products for sale or license, and reuse or residual fee payments from these products.

     "Qualified high technology business" [means]:

(1) Means a business that conducts more than fifty per cent of its activities in qualified research[.]; and

(2) Does not include any business or production that qualifies for the motion picture, digital media, and film production income tax credit under section 235‑17.

     "Qualified research" means:

     (1)  The same as in section 41(d) of the Internal Revenue Code;

     (2)  The development and design of computer software for ultimate commercial sale, lease, license or to be otherwise marketed, for economic consideration.  With respect to the software's development and design, the business shall have substantial control and retain substantial rights to the resulting intellectual property;

     (3)  Biotechnology;

     (4)  Performing arts products;

     (5)  Sensor and optic technologies;

     (6)  Ocean sciences;

     (7)  Astronomy; or

     (8)  Nonfossil fuel energy-related technology."

     SECTION 2.  Section 235-17, Hawaii Revised Statutes, is amended by amending subsection (d) to read as follows:

     "(d)  To qualify for this tax credit, a production shall:

     (1)  Meet the definition of a qualified production specified in subsection (l);

     (2)  Have qualified production costs totaling at least $200,000;

     (3)  Provide the State, at a minimum, a shared-card, end-title screen credit, where applicable; and

     (4)  [Provide evidence of reasonable efforts to hire local] Hire at least seventy five per cent of its talent and crew[; and] from the local community.  For the purposes of this paragraph, "local community" means persons who reside more than ten months of the year in the State.

    [(5) Provide evidence of financial or in-kind contributions or educational or workforce development efforts, in partnership with related local industry labor organizations, educational institutions, or both, toward the furtherance of the local film and television and digital media industries.]"

     SECTION 3.  Section 235-110.9, Hawaii Revised Statutes, is amended by amending subsection (g) to read as follows:

     "(g)  As used in this section:

     "Investment tax credit allocation ratio" means, with respect to a taxpayer that has made an investment in a qualified high technology business, the ratio of:

     (1)  The amount of the credit under this section that is, or is to be, received by or allocated to the taxpayer over the life of the investment, as a result of the investment; to

     (2)  The amount of the investment in the qualified high technology business.

     "Qualified high technology business" [means]:

(1) Means a business, employing or owning capital or property, or maintaining an office, in this State; provided that:

    [(1)] (A)  More than fifty per cent of its total business activities are qualified research; and provided further that the business conducts more than seventy-five per cent of its qualified research in this State; or

    [(2)] (B)  More than seventy-five per cent of its gross income is derived from qualified research; and provided further that this income is received from:

        [(A)]  (i)  Products sold from, manufactured in, or produced in this State; or

        [(B)] (ii)  Services performed in this State[.]; and

(2) Does not include any business or production that qualifies for the motion picture, digital media, and film production income tax credit under section 235‑17.

     "Qualified research" means the same as defined in section 235-7.3."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2007.

INTRODUCED BY:

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