TAT vs GET: Understanding Two Important Hawaiʻi Business Taxes in Hawaiʻi

 [HSF LOCAL KNOWLEDGE SERIES]

One of the most common questions from new business owners, vacation rental operators, and tourism-related businesses in Hawaiʻi is:

“Do I need to pay GET, TAT, or both?”

The answer depends on the type of business activity involved.

Because Hawaiʻi uses a unique tax system, many business owners mistakenly assume that GET and TAT are interchangeable.

They are not.

Understanding the difference can help businesses remain compliant, avoid penalties, and better manage pricing and cash flow.

What Is GET?

GET stands for General Excise Tax.

Unlike traditional sales tax systems used in many states, Hawaiʻi imposes GET on business activity itself.

GET generally applies to gross business income, meaning it is based on revenue rather than profit.

Many different types of businesses may be subject to GET, including:

• Retail stores

• Service providers

• Consultants

• Freelancers

• Restaurants

• Contractors

• Online businesses

• Property rentals

Because GET applies broadly, most businesses operating in Hawaiʻi should become familiar with its requirements.

What Is TAT?

TAT stands for Transient Accommodations Tax.

TAT specifically applies to certain short-term lodging accommodations.

Examples may include:

• Hotels

• Resorts

• Vacation rentals

• Short-term rental properties

• Certain hosted accommodations

TAT is generally associated with accommodations provided to visitors and travelers.

Because of Hawaiʻi’s tourism-based economy, understanding TAT is particularly important for lodging operators.

The Biggest Misunderstanding

Many business owners believe:

“If I collect TAT, I don’t need GET.”

This is one of the most common mistakes.

In many lodging situations, both taxes may apply.

TAT does not automatically replace GET.

Depending on the activity involved, a business may have obligations related to both taxes.

Understanding how they work together is an important part of maintaining compliance.

Example Scenario

Imagine a vacation rental property operating legally in Hawaiʻi.

The operator receives income from short-term guest stays.

In many situations:

• TAT may apply because lodging is being provided.

• GET may also apply because business income is being earned.

This is why lodging operators should understand both tax systems and maintain proper records.

Common Mistakes Businesses Make

1. Assuming TAT Replaces GET

Many new operators focus only on TAT and overlook GET requirements.

2. Reporting Only One Tax

Failing to understand when multiple tax obligations apply can create reporting problems later.

3. Improper Revenue Tracking

Separating revenue categories and maintaining accurate records can make tax reporting significantly easier.

4. Waiting Until Tax Season

Many business owners do not learn about these requirements until they are already operating.

Understanding obligations early can prevent unnecessary stress and penalties.

TAT & GET Readiness Checklist

Before operating a tourism-related business, ask yourself:

✓ Do I understand when GET applies?

✓ Do I understand when TAT applies?

✓ Do I know whether both taxes may apply to my business?

✓ Am I maintaining organized financial records?

✓ Do I understand my filing schedule?

✓ Have I reviewed current Hawaiʻi tax requirements?

Frequently Asked Questions

Is TAT the same as a hotel tax?

TAT is commonly associated with accommodations and lodging activities, but business owners should review current state guidance to determine how it applies to their operations.

Do all businesses pay TAT?

No.

TAT generally applies to qualifying lodging-related activities.

Many businesses may have GET obligations without any TAT obligations.

Can a business have both GET and TAT responsibilities?

Yes.

Depending on the nature of the business, both taxes may apply.

Do long-term rentals pay TAT?

Different rules may apply depending on the rental arrangement and length of stay.

Property owners should review current Hawaiʻi regulations or consult a qualified tax professional.

What happens if I file incorrectly?

Errors may result in penalties, interest, additional reporting requirements, or other compliance issues.

Local Knowledge Matters.

Building Hawaiʻi Together.