STAND. COM. REP. NO. 1742

Honolulu, Hawaii

RE: S.R. No. 87

Honorable Ronald D. Kouchi

President of the Senate

Thirtieth State Legislature

Regular Session of 2019

State of Hawaii

Sir:

Your Committee on Ways and Means, to which was referred S.R. No. 87 entitled:

"SENATE RESOLUTION REQUESTING THE DIRECTOR OF TAXATION TO CONVENE A TASK FORCE TO CONSIDER WORLDWIDE COMBINED REPORTING OF CORPORATE INCOME,"

begs leave to report as follows:

The purpose and intent of this measure is to request the Director of Taxation to convene a task force to determine if worldwide combined reporting, also known as "complete reporting," would be a more fair and effective form of calculating corporate taxation.

Your Committee received testimony in opposition to this measure from the Council On State Taxation.

Your Committee received comments on this measure from the Department of Taxation.

Your Committee finds that some large corporations that maintain a physical presence in Hawaii sell goods and services in the State, but reduce their tax exposure on those sales by shifting income to offshore subsidiaries and, thereby, put smaller companies who are entirely domestic at an unfair disadvantage.

As affirmed by the record of votes of the members of your Committee on Ways and Means that is attached to this report, your Committee concurs with the intent and purpose of S.R. No. 87 and recommends its adoption.

Respectfully submitted on behalf of the members of the Committee on Ways and Means,

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DONOVAN M. DELA CRUZ, Chair