HB2739

SECTION 1. Chapter 209E, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§209E- Force majeure event; agricultural businesses. If an agricultural business is:

(1) Wholly or partially prevented from maintaining eligibility requirements under section 209E‑9; or

(2) Interrupted,

by reason of or through any force majeure event, then the agricultural business shall not be disqualified under this chapter. The agricultural business shall remain eligible for all tax incentives under this chapter during any period of time while experiencing conditions under paragraph (1) or (2) caused by a force majeure event, and the seven-year eligibility period shall be extended by this period of time. The agricultural business shall be as prompt and diligent as practicable in providing the department with notice of a force majeure event or of any situation that may lead to a force majeure event."

SECTION 2. Section 209E-1, Hawaii Revised Statutes, is amended to read as follows:

"[[]§209E-1[]] Purpose. It is declared that the health, safety, and welfare of the people of this State are dependent upon the continual encouragement, development, growth, and expansion of the private sector, and that there are certain areas in the State that need the particular attention of government to help attract private sector investment. Therefore, it is the purpose of this chapter to stimulate business, agricultural, and industrial growth in areas [~~which~~] that would result in neighborhood revitalization of those areas by means of regulatory flexibility and tax incentives."

SECTION 3. Section 209E-2, Hawaii Revised Statutes, is amended by:

1. Adding three new definitions to be appropriately inserted and to read:

""Agricultural business" means any corporation, partnership, or sole proprietorship authorized to do business in the State that is qualified under section 209E-9, subject to the state corporate or individual income tax under chapter 235, and that is engaged in producing agricultural products pursuant to section 237-5, or processing agricultural products.

"Joint employment" means an employment arrangement:

(1) Between two or more employers to share an employee's services, as for example, to interchange employees;

(2) In which one employer acts directly or indirectly in the interest of the other employer or employers in relation to the employee; or

(3) In which two or more employers are not completely disassociated with respect to the employment of a particular employee and may be deemed to share control of the employee, directly or indirectly, by reason of the fact that one employer controls, is controlled by, or is under common control by the other employer.

"Leased employee" means an employee under a professional employment organization arrangement who is assigned to a particular client company on a substantially full-time basis for at least one year."

2. By amending the definition of "full-time employee" to read:

""Full-time employee" means any employee, including leased employees and employees under a joint employment relationship, for whom the employer is legally required to provide employee fringe benefits."

SECTION 4. Section 209E-9, Hawaii Revised Statutes, is amended by amending subsection (b) to read as follows:

"(b) A business firm also may 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 area immediately prior to an area being designated an enterprise zone;

(2) Meets the requirements of subsection (a)(2); and

(3) Increases its average annual number of full-time employees employed at the business' establishment or establishments located within the enterprise zone by at least ten per cent by the end of its first year of operation within the enterprise zone and by fifteen per cent annually[.] by the end of each of the fourth, fifth, sixth, and seventh years of operation, respectively, based upon the employee count at the beginning of the initial year of operation."

SECTION 5. Section 209E-10, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The department shall certify annually to the department of taxation the applicability of the tax credit provided in this chapter for a qualified business against any taxes due the State[.]; provided that for agricultural businesses only, retail sales of value-added products made from crops grown within an enterprise zone shall count towards certification for the tax credit against any taxes due the State. Except for the general excise tax, the credit shall be eighty per cent of the tax due for the first tax year, seventy per cent of the tax due for the second tax year, sixty per cent of the tax due for the third year, fifty per cent of the tax due the fourth year, forty per cent of the tax due the fifth year, thirty per cent of the tax due the sixth year, and twenty per cent of the tax due the seventh year. Any tax credit not usable shall not be applied to future tax years."

SECTION 6. Section 209E-11, Hawaii Revised Statutes, is amended to read as follows:

"§209E-11 State general excise exemptions. The department shall certify annually to the department of taxation that any qualified business is exempt from the payment of general excise taxes on the gross proceeds from the manufacture of tangible personal property, the wholesale sale of tangible personal property, the engaging in a service business by a qualified business, or the engaging in research, development, sale, or production of all types of genetically-engineered medical, agricultural, or maritime biotechnology products[.]; provided agricultural businesses shall not be exempt from the payment of general excise taxes on the gross proceeds of agricultural retail sales. The gross proceeds received by a contractor licensed under chapter 444 shall be exempt from the general excise tax for construction within an enterprise zone performed for a qualified business within an enterprise zone. The exemption shall extend for a period not to exceed seven years."

SECTION 7. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 8. This Act shall take effect upon its approval.

INTRODUCED BY:	_____________________________

HOUSE OF REPRESENTATIVES	H.B. NO.	2739
TWENTY-FOURTH LEGISLATURE, 2008
STATE OF HAWAII