HRS § 238-2.3 — Imposition of tax on imported services or contracting; exemptions


§238-2.3 Imposition of tax on imported
services or contracting; exemptions. There is hereby levied an excise tax
on the value of services or contracting as defined in section 237-6 that are
performed by an unlicensed seller at a point outside the State and imported or
purchased for use in this State. The tax imposed by this chapter shall accrue
when the service or contracting as defined in section 237-6 is received by the
importer or purchaser and becomes subject to the taxing jurisdiction of the
State. The rates of the tax hereby imposed and the exemptions from the tax are
as follows:
(1) If the importer or purchaser is licensed under
chapter 237 and is:
(A) Engaged in a service business or calling
in which the imported or purchased services or contracting become identifiable
elements, excluding overhead, of the services rendered by the importer or
purchaser, and the gross income of the importer or purchaser is subject to the
tax imposed under chapter 237 on services at the rate of one-half of one per
cent;
(B) A manufacturer importing or purchasing
services or contracting that become identifiable elements, excluding overhead,
of a finished or saleable product (including the container or package in which
the product is contained) and the finished or saleable product is to be sold in
a manner that results in a further tax on the manufacturer as a wholesaler, and
not a retailer; or
(C) A contractor importing or purchasing
contracting that become identifiable elements, excluding overhead, of the
finished work or project required under the contract; provided that:
(i) The gross proceeds derived by the
contractor are subject to the tax under section 237-13(3) as a contractor; and
(ii) The contractor could have deducted amounts
paid to the subcontractor under section 237-13(3)(B) if the subcontractor was
subject to general excise tax under chapter 237;
there shall be no tax imposed on the value of the
imported or purchased services or contracting; provided that if the
manufacturer is also engaged in business as a retailer as classified under
chapter 237, paragraph (2) shall apply to the manufacturer, but the director of
taxation shall refund to the manufacturer, in the manner provided under section
231-23(c), that amount of tax that the manufacturer, to the satisfaction of the
director, shall establish to have been paid by the manufacturer to the director
with respect to services that have been used by the manufacturer for the
purposes stated in this paragraph.
(2) If the importer or purchaser is a person licensed
under chapter 237 and is:
(A) Engaged in a service business or calling
in which the imported or purchased services or contracting become identifiable
elements, excluding overhead, of the services rendered by the importer or
purchaser, and the gross income from those services when sold by the importer
or purchaser is subject to the tax imposed under chapter 237 at the highest
rate;
(B) A manufacturer importing or purchasing
services or contracting that become identifiable elements, excluding overhead,
of the finished or saleable manufactured product (including the container or
package in which the product is contained) and the finished or saleable product
is to be sold in a manner that results in a further tax under chapter 237 on
the activity of the manufacturer as a retailer; or
(C) A contractor importing or purchasing
services that become identifiable elements, excluding overhead, of the finished
work or project required, under the contract, and where the gross proceeds
derived by the contractor are subject to the tax under section 237-13(3) as a
contractor,
the tax shall be one-half of one per cent of the
value of the imported or purchased services or contracting; and
(3) In all other cases, the importer or purchaser is
subject to the tax at the rate of four per cent on the value of the imported or
purchased services or contracting.