Until recently, motion picture or television film companies operating in Hawaii were considered to be in the business of manufacturing and were subject to the general excise tax (GET) at a rate 0.5%. This meant loan-out entities were also subject to the 0.5% tax rate. Loan-out entities are wholly-owned entities formed on behalf of an actor, performer, director, producer, or other "above the line" talent, that provide services to motion picture production companies.
However, the Department of Taxation has changed course. Motion picture or television film companies are no longer considered to be engaged in the business of manufacturing. As a result, loan-out entities are no longer eligible for the 0.5% GET rate. They are subject to the GET at the retail rate of 4%.