GET Compliance for Hawai'i Businesses

If you have moved to Hawai'i from the mainland and started a business, or if you have been operating here for years and never fully understood your tax obligations, this article is for you. Hawai'i's General Excise Tax is one of the most misunderstood taxes in the country, and that misunderstanding costs local businesses real money every year.

Let us start with the most important thing: Hawai'i does not have a sales tax. It has a General Excise Tax (GET), and the two are fundamentally different. Understanding that difference is not just an academic exercise. It changes how you price your services, how you invoice your customers, how you file your returns, and how much you actually owe.

GET vs. Sales Tax: The Difference That Costs You Money

On the mainland, a sales tax works like this: you sell a $100 item, you add 8% sales tax, you collect $108 from the customer, and you send $8 to the state. The $8 was never your money. You were just a collection agent.

Hawai'i's GET is different in three fundamental ways:

• GET is a tax on your business, not your customer. It is charged for the privilege of doing business in Hawai'i. You are the taxpayer, not the buyer. You can choose to pass the cost on to customers, but you are not required to.
• GET applies to virtually everything. Not just retail sales of goods. Services, contracting, rentals, commissions, and even business-to-business transactions are all subject to GET. In most mainland states, many services are exempt from sales tax. In Hawai'i, nearly nothing is exempt.
• GET creates a tax-on-tax effect. Since GET applies to your gross receipts, and the amount you pass on to customers is part of your gross receipts, you are technically paying GET on the GET. This is why the pass-on rate is higher than the base rate.

Current GET Rates (2025/2026)

The base GET rate depends on the type of activity:

• 4% rate: Retailing, services, contracting, commissions, rental income, and most other business activities. This is the rate that applies to the vast majority of small businesses.
• 0.5% rate: Wholesaling, manufacturing, producing, wholesale services, and use tax on imports for resale.
• 0.15% rate: Insurance commissions.

On top of the state rate, most counties add a 0.5% surcharge. As of 2025, this surcharge applies in Honolulu, Maui, Kauai, and Hawai'i County, which means it effectively applies statewide. The surcharge only applies to activities at the 4% rate, not the lower wholesale or insurance rates.

For most small businesses, the effective GET rate is 4.5%.

The Pass-On Rate: Why You Cannot Just Add 4.5%

This is where most business owners get confused, and where mistakes are expensive. If you decide to pass the GET on to your customers (which is common and perfectly legal), you cannot simply add 4.5% to your price. Here is why:

When you pass GET on to a customer, that additional amount becomes part of your gross receipts. And GET is charged on gross receipts. So you are paying GET on the GET you collected. To fully recover your tax cost, you need to charge a slightly higher percentage.

The correct pass-on rates, published by the Hawai'i Department of Taxation, are:

• 4.712% for activities in counties with the 0.5% surcharge (Honolulu, Maui, Kauai, Hawai'i County)
• 4.166% for activities in areas without a county surcharge (currently none, but the rate exists for reference)

How to Display GET on Invoices

If you pass GET on to customers, you need to display it correctly. A few rules:

• Never call it "sales tax." Hawai'i does not have a sales tax. Label it as "GET" or "General Excise Tax" on your invoices and receipts.
• You cannot charge more GET than you will actually pay. Consumer protection laws prohibit overcharging. If you use the 4.712% pass-on rate, you are recovering your cost accurately.
• Disclosure is required. If you are passing GET on, it should be visible as a separate line item so customers understand the charge.

Filing Requirements: Monthly, Quarterly, or Semiannual

Your filing frequency depends on your annual GET liability:

• Monthly filing: If your total annual GET, use tax, and county surcharge exceeds $4,000, you must file monthly on Form G-45.
• Quarterly filing: If your annual liability is between $2,000 and $4,000.
• Semiannual filing: If your annual liability is under $2,000.
• Annual return: Regardless of your periodic filing frequency, every business must file an annual reconciliation return (Form G-49) by April 20.

If your total annual tax liability exceeds $100,000, you are required to pay by electronic funds transfer (EFT). Failure to use EFT when required triggers a 2% penalty on top of what you owe.

What Happens When You File Late

The penalties for late GET filing are steep and they compound:

• Late filing penalty: 5% of the tax due per month, up to a maximum of 25%.
• Late payment interest: 2/3 of 1% per month on the unpaid balance.
• Enforcement actions: Continued non-compliance can result in wage garnishment, tax liens on property, and asset seizure.

These penalties apply even if you eventually pay in full. The clock starts the day after the deadline, not the day you receive a notice. By the time you realize you missed a filing, you may already owe penalties.

The 7 Most Common GET Mistakes (And How to Avoid Them)

1. Not registering for a GET license

Every business operating in Hawai'i needs a GET license. You obtain it by filing Form BB-1 (State of Hawai'i Basic Business Application) and paying a one-time $20 registration fee. You can register online at hitax.hawaii.gov. Your license must be displayed at your place of business, and if you operate at multiple locations, you need a branch license for each one.

2. Treating GET like a sales tax

As covered above, GET is your tax liability as a business, not a pass-through tax you collect on behalf of the state. This affects your accounting. GET expense should be recorded as a business expense, not as a liability you hold in trust for the state (which is how sales tax is typically handled in accounting software).

3. Not charging GET on services

If you moved from a mainland state where services are not subject to sales tax, you might assume the same applies in Hawai'i. It does not. Consulting, contracting, professional services, repairs, tutoring, and virtually every other service performed in Hawai'i is subject to GET.

4. Using the wrong rate for wholesale transactions

If you sell goods to another business for resale, the wholesale rate of 0.5% applies instead of the 4% retail rate. But you need documentation to support the wholesale rate. The purchasing business must provide you with a resale certificate (Form G-17). Without it, the transaction is taxed at the retail rate.

5. Forgetting that GET applies to business-to-business transactions

On the mainland, sales tax typically does not apply to B2B transactions (because the tax is collected at the final point of sale to the consumer). Hawai'i's GET has no such exemption. If you provide a service to another business, you owe GET on that income. This means the same dollar of economic activity can be taxed multiple times as it moves through the supply chain. This is often called the "pyramiding" effect of GET, and it is one of the biggest cost factors for Hawai'i businesses.

6. Not filing when you have no tax to pay

If you had no business activity in a period, you still need to file a return showing zero activity (unless your total annual liability is under $100, in which case periodic returns are not required as of 2023). Filing a zero return prevents the Department of Taxation from flagging you for non-compliance.

7. Closing your license without filing a final return

If you close or sell your business, you need to file a final return and close your GET license. Failing to do this means the state will continue to expect returns from you, and penalties will accumulate on unfiled returns.

GET Exemptions Worth Knowing About

While GET applies broadly, there are some notable exemptions and deductions:

• Enterprise Zone benefits: Businesses operating in designated Enterprise Zones may qualify for a 100% GET exemption for up to seven years.
• Certain agricultural activities and qualified research activities may receive reduced rates or exemptions.
• Income received by qualified nonprofits related to their exempt purpose is generally exempt from GET.
• Amounts received by subcontractors from licensed contractors can sometimes qualify for the 0.5% wholesale rate rather than the 4% rate, if proper documentation is maintained.

Setting Up GET in Your Bookkeeping

Proper GET tracking in your accounting software prevents most of the mistakes above. Here is how to set it up correctly:

• Create a separate GET expense account in your chart of accounts. Do not lump it in with general taxes or office expenses.
• Track GET collected from customers as income (since it is part of your gross receipts), not as a sales tax liability. This is a critical difference from how mainland businesses handle sales tax in QuickBooks.
• Reconcile your GET filings monthly. The amount on your GET return should match the gross receipts in your books for that period.
• Set calendar reminders for all filing deadlines. Monthly filers: the 20th of the following month. Quarterly filers: April 20, July 20, October 20, January 20.

The Cost of Getting It Wrong

GET compliance is not optional, and the state enforces it. The Hawai'i Department of Taxation actively audits businesses and uses data matching to identify non-filers and underreporters. If you are operating a business in Hawai'i and not filing GET returns, it is not a matter of "if" you will get caught. It is "when."

The good news is that GET compliance is straightforward once your systems are set up properly. The right accounting software, a clear chart of accounts, consistent filing, and the correct pass-on rate. That is the entire formula. No tricks, no loopholes. Just consistent compliance that protects your business and your peace of mind.

If you are behind on GET filings or not sure your setup is correct, getting it cleaned up now is always cheaper than waiting for a notice from DOTAX.