General Excise Tax (GET) Compliance for E-Commerce and Out-of-State Businesses Selling in Hawaii

Expanding your e-commerce operations to reach customers in Hawaii offers excellent revenue opportunities, but it also introduces a highly unique tax framework. Most states in the US use a standard sales tax, which is collected from the buyer and passed to the state. Hawaii uses the General Excise Tax (GET). The GET is a privilege tax assessed on the gross income of the business itself. While businesses are allowed to pass the cost of the GET onto their customers, the legal liability to pay the Department of Taxation, Honolulu rests entirely on your company.

For out-of-state companies, dropshippers, and SaaS platforms, navigating Hawaii's economic nexus laws can be confusing. Failing to register for a GET license or miscalculating your tax rate can trigger massive back-tax assessments, penalties, and interest. If your business is scaling its sales in Honolulu, Waipahu, or Kapolei, locating a skilled tax attorney or corporate lawyer in our US Lawyers Directory is crucial to ensuring full compliance and protecting your profit margins.

Understanding Hawaii's General Excise Tax (GET)

Governed by Haw. Rev. Stat. § 237-13, the GET is levied on the privilege of doing business in Hawaii. Because it is a tax on gross receipts, it applies to almost everything: retail sales, wholesale transactions, services, and even rental income. Unlike sales tax, there are very few exemptions under GET. The principles of what constitutes "doing business" in Hawaii have been heavily litigated, as seen in precedents like In re Tax Appeal of Subway Real Estate Corp., 110 Haw. 25 (HI Supreme Court 2006).

Economic Nexus Laws for Online Sellers

Prior to 2018, out-of-state businesses generally only paid GET if they had a physical presence in Hawaii (like a warehouse or an employee). However, following federal shifts, Hawaii implemented strict economic nexus laws under Haw. Rev. Stat. § 237-2.5. Today, if your business has no physical presence in Hawaii but generates $100,000 or more in gross gross income from Hawaii customers, or engages in 200 or more separate transactions with Hawaii customers in the current or preceding calendar year, you have established economic nexus. You must register for a GET license and remit taxes.

Rules for Amazon FBA Sellers and Marketplace Facilitators

If you sell exclusively through a marketplace facilitator like Amazon, Etsy, or eBay, Hawaii law requires the marketplace facilitator to collect and remit the GET on your behalf for retail sales delivered to Hawaii. However, as an Amazon FBA seller, you still have reporting requirements. You must typically still hold a GET license and file periodic returns showing your gross sales, but you will take a specific deduction to indicate that the marketplace already paid the tax, bringing your payable tax for those specific sales to zero.

Dropshippers and Wholesale Transactions

If you are an out-of-state manufacturer dropshipping products to a Hawaii retailer (who will then sell to the end consumer), this is a wholesale transaction. Wholesale transactions are subject to a much lower GET rate of 0.5%. However, to legally claim the wholesale rate, you must obtain a resale certificate from the Hawaii retailer. Without this certificate, the state will presume the transaction is retail and tax you at the full 4% to 4.5% rate.

SaaS Companies and Digital Goods

In many states, digital goods and Software as a Service (SaaS) are tax-exempt. In Hawaii, the GET applies broadly to services and intangible property. If a Hawaii resident or business pays a subscription fee to use your cloud-based software, that revenue is subject to the standard retail GET rate. You must track the billing addresses of your users to accurately apportion your Hawaii-based gross receipts.

Calculating the 4% vs. 4.5% GET Rate

The state base GET rate for retail sales and services is 4%. However, Hawaii statutes allow counties to establish a 0.5% county surcharge. Under Maui County Ordinance No. 5551, Maui County enacted a 0.5% county surcharge (in effect through December 31, 2030), joining the City and County of Honolulu, Kauai County, and Hawaii County. Consequently, all four counties in Hawaii impose a total combined GET rate of 4.5% on retail sales and services, with a maximum visible pass-on rate to customers of 4.712%. Sourcing rules require businesses to assign sales based on where goods are delivered or services are received.

Timelines for Filing GET Returns

To operate legally, you must first file Form BB-1, Hawaii, Department of Taxation, Basic Business Application to receive your GET license number. Depending on your annual tax liability, you will be assigned a filing frequency (monthly, quarterly, or semi-annually). Periodic returns are filed using Form G-45, Hawaii, Department of Taxation, General Excise/Use Tax Return. Additionally, every business must file an annual reconciliation return (Form G-49, Hawaii, Department of Taxation, Annual Return & Reconciliation of General Excise/Use Tax) at the end of their tax year.

Frequently Asked Questions (FAQ)