Effective January 1, 2018, the Transient Accommodations Tax ( TAT or Hotel Tax ) will increase by 1% – from 9.25% to 10.25%. The rate applies to all transient rental accommodation statewide.
The Transient Accommodations Tax is levied upon every operator and plan manager on the gross rental or gross rental proceeds derived from furnishing transient accommodations. Gross rental or gross rental proceeds derived from transient accommodations furnished could be subject to different tax rates depending on the timing of the payments received under the cash basis accounting method and on the outcome of the all events test under the accrual basis accounting method.
Under the cash basis accounting method, gross proceeds from transient accommodations furnished on or after January 1, 2018 will be subject to the 10.25% transient accommodations tax rate if payments are actually or constructively received on or after January 1, 2018. However, the gross proceeds from the same transactions will be subject to the 9.25% tax rate if the payments are actually or constructively received before January 1, 2018.
Under the accrual basis accounting method, gross proceeds from transactions occurring prior to January 1, 2018 will be subject to the 9.25% tax rate if the right to receive such income is fixed under the all events test prior to January 1, 2018, but will be subject to the 10.25% transient accommodations tax rate if the right to receive such income is fixed under the all events test on or after January 1, 2018.
If you have any further questions please free to contact the Department of Taxation Technical Section at (808) 587-1577 or by email at tax.technical.section@hawaii.gov