What is General Excise Tax?
General Excise Tax, often referred to as GET, is a type of tax imposed on businesses in Hawaii for the privilege of doing business in the state. It is not based on income but on the gross income of a business. In other words, businesses must pay a percentage of their total revenue, regardless of their profit or loss.
GET is commonly used by the state government of Hawaii to generate revenue for public services and infrastructure development. The tax rate can vary depending on the specific business activity and industry.
Why is General Excise Tax different from Sales Tax?
While General Excise Tax is imposed on all business activities, Sales Tax is only applied to the final sale of goods and services to consumers. This means that businesses in Hawaii must pay GET on all their revenue, while sales tax is passed on to the end consumer.
Who is required to pay General Excise Tax?
Most businesses in Hawaii are required to pay GET, including retail businesses, service providers, contractors, and professionals. Even businesses that are not making a profit are still required to pay GET on their gross income.
How is General Excise Tax calculated?
GET is calculated as a percentage of a business’s gross income. The standard rate is 4%, but certain industries may have different rates. Additionally, businesses that sell wholesale goods are subject to a lower rate of 0.5%.
Do businesses pass on General Excise Tax to consumers?
Yes, businesses typically include the cost of GET in their prices, which means that consumers ultimately bear the burden of the tax. While sales tax is itemized on a consumer’s receipt, GET is not explicitly listed.
Are there any exemptions or exclusions from General Excise Tax?
Certain activities, such as selling food for human consumption or providing medical services, may be exempt from GET. Additionally, some nonprofits and government entities may be excluded from paying GET.
What are the consequences of not paying General Excise Tax?
Businesses that fail to pay GET may face penalties, fines, and even legal action. It is essential for businesses to comply with tax laws to avoid serious consequences.
How can businesses register for General Excise Tax?
Businesses can register for GET by filling out an application with the Hawaii Department of Taxation. They will receive a license and a tax identification number once their application is approved.
Can businesses deduct General Excise Tax as a business expense?
GET is typically not deductible as a business expense for federal tax purposes. However, businesses should consult with a tax professional to determine the specific rules in their situation.
Is there a difference between state and county General Excise Tax rates?
Yes, some counties in Hawaii have surcharge rates on top of the state GET rate. It is crucial for businesses to be aware of these additional taxes when operating in multiple locations.
Can businesses file and pay General Excise Tax online?
Yes, businesses can file and pay GET online through the Hawaii Department of Taxation’s website. This electronic filing system makes it easier for businesses to meet their tax obligations.
How often do businesses need to file General Excise Tax returns?
Businesses in Hawaii are generally required to file GET returns either monthly, quarterly, or annually, depending on their gross income. It is essential for businesses to meet the deadlines to avoid penalties.
Can businesses request an extension for filing General Excise Tax returns?
Yes, businesses can request an extension to file their GET returns if they are unable to meet the deadline. However, it is crucial to submit the extension request before the original due date to avoid penalties.