Qualified production costs; premiums paid to insurers subject to tax under HRS §235-17 chapter 431, HRS

Not all taxpayers conducting business transactions occurring in the State are subject to chapter 235, HRS. In recognition of its unique business structure and place within the community, authorized insurers are subject to tax on insurance premium income under chapter 431, HRS, in lieu of tax under chapter 235, HRS. Insurance premiums paid to insurance companies not registered with the State are presumed not to be subject to tax under chapter 431, HRS, and thus are not qualified production costs under 235-17, HRS. Example 1: J3T Productions is filming a qualified production in the State and pays insurance premiums to BDDF Insurance Company, which is doing business in the State, for insurance on J3T Productions’ activities and property associated with the qualified production. The insurance premiums J3T Productions pays to the insurance company are qualified production costs. J3T Productions must submit BDDF’s insurance license number as part of the production report required under section 18-235-17-03(b). Example 2: J3T Productions is filming a qualified production in the State and pays insurance premiums to DEED Insurance Company, which is not registered to do business in the State, for insurance on J3T Productions’ activities. The insurance premiums J3T Productions pays to DEED Insurance Company are presumed not subject to chapter 431, HRS, and not qualified production costs.