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2021 Op. Haw. Att'y Gen. 1 (2021)

handle is hein.sag/saghi0098 and id is 1 raw text is: DAVID Y. IGE CLARE E. CONNORS GOVERNOR ATTORNEY GENERAL STATE OF HAWAII HOLLY T. SHIKADA DEPARTMENT OF THE ATTORNEY GENERAL FIRST DEPUTY ATTORNEY GENERAL 425 QUEEN STREET HONOLULU, HAWAI 96813 (808) 586-1500 September 22, 2021 The Honorable Isaac W. Choy Director of Taxation State of Hawaii 830 Punchbowl Street Honolulu, Hawaii 96813-5094 Dear Director Choy: RE: Hawaii General Excise Tax and Use Tax on Activities Occurring Within the Hawaii Foreign-Trade Zone and Sub-zones. This opinion responds to your request for clarification as to whether the Foreign-Trade Zones Act of 1934, codified as amended at 19 U.S.C. §§ 81a-81u (2016) (FTZA), preempts the State from imposing general excise and use tax on activity conducted within a foreign-trade zone (FTZ). I. ISSUE PRESENTED AND SHORT ANSWER Your request concerns the conclusions reached in Attorney General Opinion No. 64-52, dated November 5, 1964, and in subsequent opinions and other legal advice, including, but not limited to, the memorandum designated OP:85:812-1, dated October 23, 1985. Specifically, Opinion No. 64-52 concluded that Congress has assumed exclusive regulatory powers within the zone, and no local regulation may interfere with these powers. Based on the facts and assumptions identified therein, and based on the foregoing conclusion as to the law at the time, the opinion further concluded that: neither the general excise tax nor the consumption tax would apply on account of sales made within the zone or on account of goods imported into the zone. In the years since Opinion No. 64-52 was issued, the law changed and it is now clear that not all state taxes are preempted by the FTZA. Op. No. 21-01

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