HB 116 Summary

• Requires corporations subject to Hawaii income tax to report income from all foreign subsidiaries by filing a copy of federal Internal Revenue Form 5471 with the Department of Taxation at the same time as filing with the IRS.

• Applies Hawaii's apportionment formula under section 235-29 to determine the portion of foreign subsidiary income subject to state taxation.

• Addresses estimated annual revenue loss of $38,000,000 to the State caused by corporations shifting domestic earnings to offshore tax havens with minimal or no taxes.

• Implements "worldwide combined reporting" as a method to close tax loopholes and raise revenue from corporate tax avoidance schemes.

• Takes effect January 1, 2026.