Hawaii: Sales Tax Handbook
What constitutes sales tax nexus in Hawaii?
One of the more complicated aspects of Hawaii sales tax law is sales tax nexus, the determination of whether a particular sale took place within the taxation jurisdiction of Hawaii, and is thus subject to state (and possibly local) sales taxes.
If a vendor's transactions are determined to have nexus in Hawaii, the vendor must register for a Hawaii sales tax license and collect appropriate sales taxes from the buyer for all transactions with nexus in the state. On this page, we have compiled some of the most commonly needed facts about what constitutes sales tax nexus in Hawaii.
Sales Tax Nexus in Hawaii
While Hawaii does not exactly have sales tax, the state does employ a general excise tax. This tax is assessed on any and all business activities. To have tax nexus in Hawaii, you must have some presence in the state, such as any sort of employee or other representative within the state's boundaries, or any office or warehouse in Hawaii.
For additional details on sales tax nexus law in Hawaii, see the nexus information page from the Department of Taxation at http://files.hawaii.gov/tax/legal/tir/1990_09/tir95-5.pdf
Taxation of Internet-Based Sales in Hawaii
NOTE: 2018 Supreme Court Ruling Regarding Online Sales Taxes
In the 2018 Supreme Court case South Dakota vs. Wayfair Inc, Et Al., the court overturned a previous ruling that required a merchant to have physical nexus in order for a state to collect sales tax. This means that any state is now free to enforce collection of sales taxes on out-of-state online merchants. The information provided here may be subject to change, and many states are expected to begin collecting online sales taxes following this ruling.
Generally, Hawaii does not charge sales tax on Internet-based transactions determined to have nexus within the state. This means that purchases from Amazon.com and other Internet-based retailers may be sales-tax-free. Hawaii does not have any sort of "click-through" nexus.
The nexus status and taxability of Internet-based sales, by vendors and/or consumers within Hawaii, have been the subject of hot debate in recent years. You can learn more on our introduction to Internet-based sales taxes.
Does my business have tax nexus in Hawaii?
The folks at the sales tax compliance company Avalara are an approved Hawaii sales tax partner, and you can use their free Hawaii nexus wizard tool to determine whether or not your business has nexus, and is therefore required to pay Hawaii sales taxes. If you're interested in automating your sales tax collection and filing process, click here to get more information.
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