HI HR179

Hawaii Department of Taxation is requested to conduct a comprehensive analysis of corporate income reporting structures, including how foreign subsidiary income is treated under current law.

The analysis must evaluate potential revenue impacts under three alternative reporting models: separate entity reporting, water's-edge combined reporting, and worldwide combined reporting.

The study should estimate corporate income tax revenue from corporations with foreign subsidiary structures and assess how alternative tax base definitions would interact with Hawaii's current apportionment methodology.

Administrative feasibility, compliance costs, enforcement implications, and a comparison of approaches used by other states must be included in the analysis.

The Department of Taxation must submit its report to the Legislature no later than twenty days before the Regular Session of 2027 convenes.