On Jan. 18, 2019, bills similar to those introduced but not enacted in 2018 were introduced in the Hawaii state legislature (HB 475, SB 301, SB 675). HB 475 and SB 301 would eliminate the REIT dividends paid deduction (DPD) for Hawaii tax purposes. SB 675 would require REITs to file either a composite (entity-level) tax return or pay withholding tax attributable to distributions to non-resident shareholders based on their pro rata share of a REIT’s income attributable to Hawaii. A number of related, anti-REIT bills also have been introduced in the Hawaii legislature (HB 605; SB 1510; HB 740; HB 1064; HB 1290). These bills would eliminate the REIT DPD and/or require REITs to file either a composite (entity-level) tax return or pay withholding tax attributable to distributions to non-resident shareholders based on their pro rata share of a REIT’s income attributable to Hawaii.
The Hawaii House Committee on Economic Development and Business has scheduled a hearing for Wednesday, Jan. 30, 2019 on HB 475.
Nareit will continue to oppose these bills, just as it has opposed similar legislative proposals in past years to alter or eliminate the dividends paid deduction and/or to impose REIT shareholder withholding taxes in Hawaii.
(Contact: Dara Bernstein at dbernstein@nareit.com)