HB 475 Summary

• Adds Section 857(b)(2)(B) of the Internal Revenue Code to Hawaii's list of non-operative provisions, making the federal dividends paid deduction unavailable for real estate investment trusts (REITs) under Hawaii tax law.

• For taxable years beginning before January 1, 2020, limits the REIT dividends paid deduction to amounts attributable to income taxable under Hawaii law.

• For taxable years beginning after December 31, 2019, completely disallows any deduction for dividends paid by REITs.

• Requires 10 percent of revenue generated from REIT taxation to be used by the Department of Business, Economic Development, and Tourism to fund economic development in the State.

• Applies to taxable years beginning after December 31, 2112.