Bill > HR179

This resolution requests the Department of Taxation to conduct a thorough study of how corporations report their income, including how income earned by their foreign subsidiaries is treated, to help the state plan its long-term finances. The study will examine the current system, which starts with federal taxable income and applies state-specific adjustments, and consider different reporting methods like separate entity reporting, water's-edge combined reporting, and worldwide combined reporting, each having different effects on revenue stability and business competitiveness. The analysis will also estimate the tax revenue from companies with foreign subsidiaries, evaluate the potential financial impacts of alternative reporting models, assess how these models interact with Hawaii's current tax allocation methods, consider administrative challenges and costs, compare approaches used by other states, and identify any data or implementation issues. The findings will be reported to the Legislature before the 2027 legislative session.