Hawaii Sales and Use Tax

The County of Hawaii adopted a 0.25% county surcharge on general excise tax beginning January 1, 2019, to December 31, 2020. The County subsequently adopted an additional county surcharge rate of 0.25% beginning on January 1, 2020. The sunset date was also extended from December 31, 2020 to December 31, 2030. Thus, beginning on January 1, 2020 and ending on December 31, 2030, the county surcharge rate for Hawaii County will be 0.5%.

Activities Subject to the County Surcharge

The county surcharge only applies to transactions subject to Hawaii general excise and use tax at the retail rate (4%). The total rate of tax imposed on transactions subject to the Hawaii county surcharge is 4.5%.

County Surcharge Visibly Passed On

General excise tax is levied on the gross receipts of a business, including amounts that are passed on and collected from customers. The maximum rate that may be passed on to customers is higher than the statutory rate of 4.5%. However, a seller is prohibited by consumer protection law from visibly collecting more than the amount actually owed. The maximum rate that may be visibly passed on in Hawaii County is 4.712%. This pass on rate is limited to six decimal places and is calculated as follows:

• When the taxes are visibly passed on the gross receipts consist of the price and tax;
• The price represents 95.5% of the gross receipts and the tax represents 4.5% of the gross receipts; and
• The tax stated as a percent of the price is 0.047120 or 4.712% (4.5% divided by 95.5%).

It is important to note that the 4.712% rate is the maximum rate of tax that may be visibly passed on. Sellers may also pass on the tax at the statutory rate of 4.5% or may elect not to visibly pass on the tax at all.