H.B. 534 - Ship Repair Industry Tax Credit

• Establishes a ship repair industry income tax credit for not-for-profit entities involved in designing and constructing a purpose-built floating drydock at Pearl Harbor for United States Navy use.

• Replaces the capital infrastructure tax credit (which previously applied to businesses relocating within Honolulu harbor) with the new ship repair industry tax credit focused on drydock construction.

• Allows qualified entities to claim a tax credit equal to a percentage of total costs paid or incurred for drydock construction, with the maximum credit amount to be determined, once the drydock is completed and placed into service.

• Permits qualified entities to form special purpose entities to raise investor capital and claim credits, with aggregate annual credit limits and carryover provisions for excess credits to subsequent years.

• Requires taxpayers claiming the credit to submit documentation to the Department of Taxation within 90 days of the calendar year end, with penalties of $5,000 per month (up to $25,000) for failure to comply.