Hawaii currently allows a 100% income tax credit for investments into Hawaii-based high-technology businesses. Specifically, investors can receive credits over 5 years for investing up to $2 million per qualified hi-tech business (QHTB) per year. In addition, these tax credits can be traded; Hawaii investors can earn up to a 200% tax credit by trading a portion of their equity with non-tax motivated investors, who can gain up to 25% additional equity in their investments in exchange for their unused credits.
Kolohala leverages the Act to increase overall investor ROI in our funds.
QHTBs must operate in one of the following areas in order to be certified by the Hawaii Department of Taxation (DOT):
Development and design of computer software
Biotechnology
Performing arts products
Sensor and optic technologies
Ocean sciences
Astronomy
Non fossil fuel energy-related technology
History of the Act 221/215 High-Technology Investment Incentive legislation
In 2001, the Hawaii State Legislature approved a tax-credit program to promote investment in specific industry sectors. The Bill, Act 221, was later revised to Act 215, and is currently slated to run until the end of calendar year 2010. In just the first three years, Act 221/215 resulted in $108 million in investment in the high technology industry in Hawaii. The high-technology sector grew by 10% between 2001 and 2004, twice as fast as the job growth rate for the state.
Additional information on these incentives can be found at the State of Hawaii Department of Taxation web site.