Hawaii allows uniform sales tax exemption certificates for use across states. Exemption certificates are forms certifying qualification for tax-free purchases. You present them to vendors to make purchases exempt from sales tax. Tax authorities monitor exemption certificates to ensure taxes are paid as required.
Expired exemption certificates lead to audit issues and penalties. Invalid certificates make sellers liable for uncollected tax plus interest and fines.
Hawaii’s sales tax rate is 4%. Some cities and counties add local taxes. Exemptions vary.
How to Obtain a Resale Certificate in Hawaii
To get a resale certificate:
- Download Hawaii Certificate of Resale Form
- Identify seller name
- Enter certificate date
- Include buyer’s tax ID number
- Describe buyer’s business
- Indicate purchase purpose
- Enter buyer name, address, title, and signature
Update the certificate if the resale percentage changes.
Resale certificates are free in Hawaii and do not expire. With a valid certificate, you can buy wholesale goods without paying sales tax and pay use tax instead. Hawaii has an excise tax rather than a sales tax. The tax is imposed on sellers, who can pass it on to customers who agree to it.
For resale, the tax is lowered from 4% to 0.5%, potentially saving tens of thousands annually depending on business size. Users must resell items and collect tax.
Benefits and Use of Resale Certificates
A resale certificate in Hawaii lets you buy inventory without paying the normal 4% sales tax. Instead, you pay only 0.5%. This reduces expenses significantly, depending on your business volume. To reap the benefits, you must resell the items and collect tax from your customers.
Certificates don’t expire in Hawaii, but they must be kept up to date. An updated certificate allows you to buy at wholesale without sales tax and obliges you to pay use tax instead. Sellers pay the excise tax and may pass it on to customers by agreement.
A resale certificate reduces the tax on inventory purchased for resale from 4% to 0.5%, amounting to considerable annual savings for businesses. Users must resell the purchased items and are responsible for collecting tax from their customers.