Bill > HB759

This bill addresses tax haven abuse by implementing several key provisions aimed at increasing corporate tax transparency and revenue collection. Effective January 1, 2026, the bill requires corporations to report income from all foreign subsidiaries by filing federal Form 5471 with Hawaii's Department of Taxation, and to include this foreign subsidiary income in their state tax calculations. The state will apply its existing apportionment formula to determine the taxable share of corporate profits, with resulting revenues deposited into the state's general fund. Additionally, corporations will be required to report all profits, losses, revenues, inter-company transactions, and taxes paid in other states. The bill also establishes a Corporate Tax Law Task Force within the Department of Taxation (DOTAX) that will annually review state corporate tax laws and recommend updates to close tax loopholes. The task force, comprised of the director of taxation and the chairperson of the Council on Revenues (or their designees), will analyze what income can be taxed and review federal corporate tax law changes to ensure alignment with state laws. The legislature's motivation stems from a 2019 report estimating that the state loses $38 million annually due to outdated tax reporting requirements, with worldwide combined reporting considered the most effective method to address corporate tax avoidance.

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https://www.capitol.hawaii.gov/session/measure_indiv.aspx?billtype=HB&billnumber=759&year=2026