Alert

Jet parts purchased from Boeing aren’t exempt as service and maintenance costs under Hawaii’s General Excise Tax (GET), according to a ruling by the Hawaii Intermediate Court of Appeals.

The court ruled against Hawaiian Airlines, Inc., clarifying that the exemption applies only to taxpayers who service and maintain aircraft, not to the sale of tangible property such as aircraft parts.

Hawaiian had paid the assessed GET under protest and sought a refund, but the court affirmed the Hawaii Department of Taxation’s position that Boeing’s sales of aircraft parts are taxable, and that Hawaiian is not entitled to a refund in its November 10, 2025, ruling.

Key Points of the Ruling

• The exemption under Hawaii Revised Statutes (HRS) Section 237-24.9 applies solely to amounts received from servicing and maintaining aircraft, not to sales of tangible personal property.
• Sales of aircraft parts are subject to the GET under HRS Section 237-13(2), which taxes sales of tangible personal property.
• Hawaiian’s payment of the GET on behalf of Boeing did not entitle it to a refund, as the tax liability rests with the seller.
• The court rejected Hawaiian’s argument that the exemption should apply because the parts are necessary components of aircraft maintenance, emphasizing that the legislature’s intent controls.
• The court held that the Use Tax exemption for imported materials used in aircraft servicing does not require a parallel exemption under GET, and the tax structure doesn’t violate the Commerce Clause.
• Policy concerns raised by Hawaiian about penalizing local sellers and encouraging relocation of maintenance facilities were deemed legislative matters outside the court’s role.

Why This Matters

This decision underscores the importance of distinguishing between taxable sales of tangible property and exempt service activities under Hawaii’s tax laws.

Businesses purchasing aircraft parts should be aware that such purchases are subject to the GET, and exemptions for maintenance services do not extend to the sale of parts.

The ruling also highlights that tax liability generally falls on the seller, even if the buyer agrees to pay the tax under contract.

Additionally, the ruling clarifies the relationship between Use Tax and GET exemptions and affirms the court’s role in applying legislative intent rather than policy considerations.

Next Steps

If your business purchases aircraft parts or similar tangible property in Hawaii, it’s crucial to understand the applicable tax obligations and exemptions.

We’re Here to Help

For questions or assistance navigating Hawaii’s GET requirements, please contact your firm professional.

Additional Resources

• Aerospace & Defense Practice
• State & Local Tax Services