HAR § 18-235-22-01 — Definitions

As used in this subchapter: “Allocation” refers to the assignment of nonbusiness income to a particular state. “Apportionment” refers to the division of business income between states by the use of a formula containing apportionment factors. “Combined reporting method” means the same as in section 18-235-22-03. “Director” means the director of taxation. “Multistate Tax Compact” means the Multistate Tax Compact as enacted by several of the states of the United States and the District of Columbia, and by this State in section 255-1, HRS. “Taxpayer” means a taxpayer as defined as in section 235-1, HRS, which: (1) Has income from business activity that is taxable both in this State and in another State, other than activity as a public utility or the rendering of purely personal services by an individual; or (2) Conducts business activity within this State and is a member of a unitary group that has income from business activity described in paragraph (1). “Uniform Division of Income for Tax Purposes Act” means the Uniform Division of Income for Tax Purposes Act as enacted by several of the states of the United States, and by this State in part II of chapter 235, HRS. “Unitary business” means a business carried on by a group of entities that includes the taxpayer where there are flows of value among the entities resulting from (1) functional integration, (2) centralization of management, or (3) economies of scale. Generally, if the operation of a business within Hawaii is integrated with, is dependent on, or contributes to the operation of the business outside Hawaii, the entire business is unitary in character. HRS §235-21 HRS §235-22 §18-235-22-03 “Unitary group” means a group of entities carrying on a unitary business, but with respect to any taxpayer a unitary group does not include: (1) Any foreign affiliate (as defined in section 18-235-38.5-02) of the taxpayer; or (2) Any entity that is not related to the taxpayer within the meaning of section 267(b) and (c) (with respect to disallowance of deductions for transactions between related taxpayers), IRC.