If you run an Ecommerce or CPG business in Hawaii, securing a Hawaii Resale Certificate is a smart move to protect your margins and streamline operations.
This certificate allows you to purchase inventory and raw materials at a reduced General Excise Tax (GET) rate, helping you lower upfront costs, stay competitive in pricing, and remain compliant with Hawaii’s unique General Excise Tax (GET) laws.
Understanding Resale Certificates in Hawaii
What is a Hawaii Resale Certificate?
In Hawaii, a Resale Certificate is a document issued by the Hawaii Department of Taxation.
Unlike most states, Hawaii has a different way of using resale certificates. That’s because Hawaii uses General Excise Tax (GET) instead of sales tax. The difference between the two is simple.
GET is imposed on business activities with the option to pass that tax onto the business’s customers. Meanwhile, sales tax is levied on consumers alone.
Due to this unique system, using a resale certificate in Hawaii allows businesses to:
- Purchase taxable goods from suppliers at a reduced GET rate of 0.50%. This applies to transactions where the purchasing reseller operates or resells the purchased goods within Hawaii.
- Sell tax-exempt goods to be shipped and used outside of Hawaii (also applies to exported services). Businesses qualify for a full GET exemption if the exported goods are intended for resale outside of Hawaii.
In summary, typical resale transactions within Hawaii are subject to only a reduced GET rate.
However, there is another specific case where a no-tax condition may occur when using a Hawaii resale certificate. It only applies to transactions involving imported goods.
To explain, here’s a simple scenario:
- Vendor A imported goods to resell them in Hawaii. This makes them the original importer of the taxable goods meant for resale within the state.
- Vendor B purchases the imported goods from Vendor A to resell them in Hawaii. Both vendors are registered in the state and should typically be subject to GET for the sale transaction.
- But since the goods were originally imported, the vendors qualify for a GET exemption under Hawaii’s administrative code §237-29.55. However, the purchasing vendor (Vendor B) must provide a Hawaii resale certificate to the selling vendor (Vendor A) to claim the exemption.Each vendor must keep a copy of the completed form to prove why no GET was collected for the transaction.
This no-tax cycle may recur until the “final point” of the transaction, where the GET shall be collected.
While the condition seems complicated, the logic behind it is simple. The purpose is to prevent double taxation and reduce the overall tax burden on imported goods in Hawaii.
This shows that a Hawaii resale certificate is not a blanket exemption from GET obligations. Out-of-state businesses must still collect and remit sales tax on taxable sales. Meanwhile, Hawaii-based suppliers must properly pass on the General Excise Tax (GET) on qualified resale transactions.
Why do you need a Hawaii Resale Certificate?
Obtaining a resale certificate in Hawaii offers several significant advantages for businesses that purchase goods for resale.
Here are some key benefits, notably for Hawaii-based vendors:
- Pay a Reduced General Excise Tax (GET): The most direct benefit is purchasing inventory and materials that will be resold to customers without paying Hawaii’s standard 4.00% state-level GET upfront, instead applying the 0.50% wholesale rate. In some cases, you may also qualify for a full GET exemption. That occurs when buying originally imported goods for subsequent wholesale resale in Hawaii or reselling exported goods outside of Hawaii.
- Maintain Competitive Pricing: By paying a reduced GET rate of 0.50% on the cost of goods, businesses have more flexibility in setting competitive prices in the Hawaii market. This can be a crucial advantage, especially in price-sensitive industries.
- Legal Compliance: Possessing and using a valid resale certificate for eligible purchases ensures businesses comply with Hawaii’s GET laws and regulations to avoid penalties. Crucially, vendors must keep copies of valid resale certificates on file to justify why they did not collect General Excise Tax (GET) on a particular sale. This shifts the burden of proof to the purchaser if the Hawaii Department of Taxation later questions the exemption.
In Hawaii, the specific form required for a resale certificate is the Form G-17 (General Form 1).
When filling out Form G-17, a purchaser must include their Hawaii GET license number to identify that it is registered with the Hawaii Department of Taxation and authorized to make tax-exempt purchases for resale.
Resale Certificate vs. Sales Tax Permit: What’s the Difference?
In Hawaii, the equivalent of a Sales Tax Permit is a General Excise Tax (GET) License. This license authorizes your business to collect and remit GET on taxable sales to customers.
Meanwhile, a buyer can use a Hawaii Resale Certificate (Form G-17) to purchase, or a seller can use it to sell goods at a reduced GET rate if those goods are intended for resale. To use a resale certificate, you must have an active General Excise Tax (GET) License.
Who Can Use a Resale Certificate in Hawaii?
Businesses that purchase goods for resale can use a Hawaii Resale Certificate. To do so, the business must actively sell taxable tangible products and hold a valid Hawaii GET License.
How to Get a Resale Certificate in Hawaii: A Step-by-Step Guide
Getting a resale certificate in Hawaii is simple, but you’ll need to meet a few key requirements first. Here’s how to do it:
1. Make Sure You’re Eligible: Your business must sell taxable goods or services and be registered with the Hawaii Department of Taxation. Only businesses with a valid Hawaii GET License can use a resale certificate.
2. Register for a Hawaii GET License: If you don’t already have one, apply for a Hawaii GET License through the Hawaii Tax Online. You must obtain this permit before using the Form G-17 resale certificate.
Need help? Read our blog: How to Get a Seller’s Permit in Hawaii
3. Gather Your Business Information: Aside from your signature, you’ll need basic business details to complete the resale certificate, including:
- Your business legal name and any trade names.
- Your business address and contact information.
- Your Federal Employer Identification Number (FEIN) or Social Security Number (SSN) if you’re a sole proprietor.
- Your Hawaii tax identification number or GET license number (if already obtained)
- Your business type (e.g., sole proprietorship, LLC, corporation).
4. Complete the Form G-17: Download and fill out the Hawaii Resale Certificate (Form G-17) from the Hawaii Department of Taxation’s website. You’ll present this form to your suppliers when making tax-exempt transactions.
5. Submission: No submission required in Hawaii. You don’t submit the resale certificate to the state. Instead, give the completed form directly to your suppliers when buying items for resale. If you are the seller, you only need to keep a copy of the completed form.
6. Pay Any Applicable Fees: There’s no cost to use Form G-17, but you’ll need a valid Hawaii GET License. To see if there’s a cost for the license, check out our guide on Sales Tax Permit fees.
7. Understand Renewal Requirements: Your Hawaii resale certificate remains valid only while your GET License is active. To maintain your ability to make tax-exempt purchases for resale, you must keep your Hawaii GET License active as the state requires.
How to Use a Hawaii Resale Certificate
To properly utilize your resale certificate in Hawaii when making qualifying transactions for resale, you’ll need to present a valid copy of your Hawaii Resale Certificate to your supplier at the time of purchase.
Hawaii does not directly accept resale certificates issued by other states. If you are an out-of-state reseller purchasing from a Hawaii-based vendor, here are your options:
- Register your business in Hawaii: If your business has a nexus within Hawaii, you are required to register with the Hawaii Department of Taxation. This grants you a GET License, which you need to use Form G-17 to make qualifying purchases for resale. This is the most straightforward and universally accepted method.
- Consider the Multistate Tax Commission (MTC) Uniform Sales and Use Tax Certificate (for certain goods transactions): While Hawaii generally requires its own GET License and Form G-17 for in-state resale, some Hawaii vendors may accept the MTC Uniform Certificate for certain tangible goods purchases intended for resale.However, its applicability in Hawaii is nuanced; it primarily helps the seller justify applying the lower GET rate rather than a traditional sales tax exemption for the buyer. It typically requires a valid ID from any state.
Be aware that vendors may decline other certificates if they determine the form doesn’t meet Hawaii’s standard requirements. In that case, a vendor can legally opt to collect the full GET on the transaction.
Unregistered Out-of-State Buyers vs Registered Buyers
Registered buyers with a GET License in Hawaii have more advantages when it comes to using resale certificates in the state. Here’s why:
Having a GET license grants the privilege of using Hawaii’s Form G-17 with ease. Meanwhile, unregistered out-of-state buyers can only utilize the MTC Uniform Certificate instead.
However, that option leaves out-of-state buyers at the discretion of individual Hawaii vendors. Meaning, there is no guarantee that the vendor will accept your resale transaction. In that case, you’ll end up charged with the standard 4.00% GET (plus any applicable surcharges).
For consistent and clear tax treatment, especially for goods intended for resale within Hawaii, obtaining a Hawaii GET License and using Form G-17 is the most advisable path.
For more comprehensive information regarding General Excise Tax laws in Hawaii, you can refer to Hawaii Revised Statutes (HRS) Chapter 237 (General Excise Tax Law). For detailed rules and interpretations on how these laws are applied, you may also consult Hawaii’s Administrative Rules Title 18, Chapter 237.
Multi-Jurisdictional Resale Certificates
A standardized multi-jurisdictional resale certificate simplifies tax-exempt purchases for businesses that operate and make purchases for resale across state lines.
Unlike a standard resale certificate issued by a single state, a multi-jurisdictional certificate seeks recognition and acceptance by multiple states as valid proof that the buyer intends to purchase the goods for resale and is therefore exempt from sales tax at the time of purchase.
For Hawaii, it helps the seller justify applying a reduced General Excise Tax (GET) rate or a full GET exemption on their gross income.
However, it’s crucial to understand that not all states accept these multi-state forms, and acceptance can come with specific conditions.
There are two primary types of multi-jurisdictional resale certificates that a business operating in or selling to vendors in Hawaii might encounter:
- Uniform Sales & Use Tax Resale Certificate – Multijurisdiction Form: This is a widely recognized form accepted by a significant number of states (though not all). Hawaii accepts the form, but you cannot use it for the resale of taxable services. When completing this form for a purchase from a Hawaii vendor, purchasers should include their Hawaii GET license number if they have one; otherwise, out-of-state purchasers should include their home state’s registration number.You can find this form on the Multistate Tax Commission (MTC) website.
- Streamlined Sales Tax (SST) Certificate of Exemption: Hawaii is not a member of the Streamlined Sales Tax Governing Board. Therefore, while a Hawaii vendor might accept an SST Certificate of Exemption, they are primarily looking for a Hawaii Resale Certificate (Form G-17) or the Uniform Sales & Use Tax Resale Certificate.You can find more information about the SST and its member states on the Streamlined Sales Tax Governing Board website.
To ensure a seamless transaction, verify which alternative certificate your Hawaii suppliers are willing to accept. This practice also helps avoid potential audit issues.
Responsibilities When Using or Accepting a Hawaii Resale Certificate
Buyer Responsibilities
If you’re using a Hawaii resale certificate, you must ensure you use it only for purchases of goods or services you intend to resell. Using it for personal or operational items (like office supplies or equipment) is illegal and may lead to penalties.
- Hawaii-based buyers: Provide a fully completed Form G-17 to your supplier for qualifying purchases. Ensure that you activate your GET license number and declare that you intend the purchase for resale.. These rules are under Hawaii’s administrative code §18-237-13-02.01.
- Out-of-state buyers: If you have a Hawaii General Excise Tax (GET) License, provide a fully completed Hawaii Form G-17 to your Hawaii supplier for qualifying purchases.If you don’t have a Hawaii General Excise Tax (GET) License, you may attempt to provide a completed Multistate Tax Commission (MTC) Uniform Sales & Use Tax Certificate to your Hawaii supplier. Your home state’s seller’s permit number must be active for this form.
To consistently claim a GET reduction or exemption when purchasing from Hawaii suppliers, possessing a valid Hawaii GET License is the most advisable method.
While some vendors in Hawaii may accept other certificates, they are not obligated to do so. Furthermore, without a Hawaii GET License, the state may not refund any tax collected by the vendor. Both buyers and sellers share the same duty of keeping a copy of the completed resale certificate.
Seller Responsibilities
As a seller in Hawaii, accepting a resale certificate comes with the responsibility of verifying and retaining proper documentation for sales that qualify for a reduced General Excise Tax (GET) rate or a full GET exemption. You must:
- Accept the certificate in good faith
- Ensure it includes all required information: buyer’s name, address, Hawaii GET license number (or valid out-of-state ID if applicable for MTC form), reason for exemption, and signature
- Reject the certificate if the items aren’t for resale (e.g., personal or business use)
Keep records for at least 3 years: A properly completed resale certificate is your official proof of why the full General Excise Tax (GET) wasn’t collected or why a reduced GET rate/exemption was applied. You must retain it in your records for at least three years as required by Hawaii Revised Statutes §237-41, in case of a GET audit by the Hawaii Department of Taxation.
Frequently Asked Questions About the Hawaii Resale Certificate
Are There Penalties for Misusing a Hawaii Resale Certificate?
Yes. The intentional misuse of the Form G-17 may result in the following penalties:
- Class C Felony: Willful tax evasion, false statements, or failure to collect and pay tax can lead to a $100,000 fine. You may also receive probation or imprisonment varying between 1 to 5 years depending on the offense.
- Misdemeanor: Applies to anyone willfully failing to comply with certain tax duties or requirements. This is in pursuant with Hawaii’s administrative code 231.
Does a Hawaii Resale Certificate Expire?
The resale certificate (Form G-17) has no expiration date. However, it is only valid while your Hawaii GET license remains active. If your license is revoked or inactive, your resale certificate becomes invalid.
How Do I Verify a Resale Certificate in Hawaii?
If you’re completing a resale transaction in Hawaii, here’s how to validate the state’s resale certificate:
- Request a completed Form G-17 from the buyer.
- Locate the GET license number or Hawaii Tax Identification number on the form.
- Go to tax.hawaii.gov and use the “License Search” feature to confirm the permit is active.
How TaxHero Can Help
You don’t have to complicate managing sales tax compliance and resale certificates in Hawaii. TaxHero simplifies the process. From keeping your Hawaii General Excise Tax (GET) License active to ensuring you use resale certificates correctly.
Save time. Avoid penalties. Stay compliant.
Schedule a Demo to see how TaxHero can streamline your resale certificate in Hawaii process today!