What Are These Licenses For?
General Excise Tax is similar in some respects to a sales tax. When you buy something at a store, GET is usually added on to the purchase price. GET also applies to independent contractors, such as landlords, realtors, handymen etc. The State of Hawaii collects GET at several different levels.
The GET rate is 4.5%. However, the taxpayer must pay the State of Hawaii "tax on tax". For example a $100 sale would normally generate $4.50 in tax. Vendors generally pass the tax on to the consumer and one might conclude the amount with passed on tax would be $104.50. Actually, the state charges 4.5% on the amount collected, which is $104.50 so the tax due is $4.70 ($104.50 x 4.5%).
TAT is charged at 9.25%. The state does not charge "tax on tax" for this room tax.
Short term rentals such as hotel rooms are subject to BOTH GET and TAT. Thus, a $100 room rate would cost a customer about $118 with the taxes added..
How to Apply for the Licenses
The Traditional Way
Complete the BB-1 form and mail it in with the application fee (approximately $20). If you're getting the licenses for a transient rental, make sure an apply for both the GET and TAT licenses. For long term rentals, a GET license maybe all you need.
The High Tech Way
Apply for the licenses online! Visit the Hawaii Business Express website. Then click "Create an Account". If you're a first time user, click "No" and proceed to setting up your account.