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Legislation: taxation news

17 Jan 2012

At the first stroke of midnight on the first day of 2012, new Lithuanian tax law changes entered into force. Please be introduced with the following changes:

Law on Excise Duties:

  • Higher excise duty rates on wine from fresh grapes and other fermented beverages and intermediate products came into force on 1 January 2012.
  • Recent changes related to the sale of cigarettes, cigars and cigarillos entered into force on 1 January 2012:
  • The highest cigarette sales price is determined by the maximum retail price of the goods, which is indicated not on the banderol, but on the package;
  • The increase in the rate of excise duty on cigars and cigarettes.

Law on Guarantee Fund:

  • Entities specified in the Article 2.1 of the Law shall have an obligation to pay a contribution of 0.2 per cent calculated from the employee’s salary to the Guarantee Fund.

Law on Personal Income Tax:

  • Since 1 January 2012 a self-employed resident may choose to pay a fixed income tax, if he does not have an obligation to register as a VAT payer in accordance with Lithuanian laws.
  • Since 1 January 2012 a resident may choose to pay a fixed income tax for the lease of real estate, if the income from such activities does not exceed LTL 155,000 during the tax period.
  • Since 1 January 2012 a fixed rate on income tax for Lithuanian resident who perform individual activity under a business licence shall be determined by the municipality. This Law also determines tax calculation rule. Municipal council may decide to reduce this rate.
  • Since 1 January 2012 resident of Lithuania may request a tax authority to transfer 1 per cent of income tax, which has been paid by the resident, to a political party registered in the Register of Legal Entities.

Law on Tax Administration:

  • On 1 January 2012 a new institute launched its activity. It shall give an opportunity for tax payers to make a request in order to get a permission for a future contract and/or pricing principles of a specific controlled contract.

Law on Real Estate Tax:

  • Residence (including gardens, farm, home farm, recreation, etc.), which is owned by an individual, with a total value exceeding 1 million Litas, is subject to 1% real estate tax rate. Asset value is calculated by summing the value of all asset, which are owned by all the family members (spouses and minor children).

Law on Corporate Income Tax:

  • 5 per cent income tax rate shall be applicable if the income does not exceed 1 million Litas (before this amendment it was 500 000 Litas) and the tax payer meets other requirements indicated in the Law.
  • Tax concession for enterprises acting in the free economic zone, whose capital investment have reached at least 1 million Euros, shall be applicable also in those circumstances, where 75 per cent of their income shall contain from production of aircraft, spacecraft and related equipment, aircraft and spacecraft repair and technical maintenance, and other activity related to aircraft maintenance and repair, computer programming business, computer consulting business, computer facilities management, computer equipment management, other information technology and computer services, data processing, web servers (hosting) and related activities.
  • Insurance technical provisions to be permitted to deduct from income shall be determined by the Minister of Finance in accordance with the rules of calculation of insurance technical provisions approved by the Bank of Lithuania.

Law on Value-Added Tax:

  • On 1 January 2012 the threshold for registration as a VAT payer was increased to 155,000 Litas (it was 100,000 Litas).
  • Since 1 January 2012 VAT payers are allowed to adjust the output VAT on bad debts.
  • The term for preferential VAT rate of 9 per cent for heating energy supplied to residential place heating, water and energy in order to heat the water supplied to residential places is being extended until 31 December 2012.
  • The term for preferential VAT rate of 5 per cent for drugs and medical aids, which are fully or partially compensated, is being extended until 31 December 2012.
  • Since 1 January 2012 21 per cent rate for hotels and special accommodation services (it was 9 per cent).
  • other changes.

Laws on State Social Insurance and Health Insurance:

  • Pensions social insurance concession for persons, who are employed under an employment contract for the first time and whose monthly salary does not exceed 3 MMA, shall be repealed from 1 August 2012.
  • On 1 January 2012 the new changes in insurance premium rates on industrial accidents and occupational diseases came into force. Rate depends on employer’s rate group and ranges from 0.18 per cent. to 1.8 per cent. (it was from 0.18 per cent. up to 0.9 per cent).

Law on Land Tax:

  • Until 1 January 2013 land tax system in principle shall be aligned with other real estate tax system:
  • Land tax shall depend on taxable value calculated in accordance with the massive appraisal;
  • It shall be permitted to apply for taking into account the value of the land, which has been calculated during the individual assessment, if the estimated value differs from the massive appraisal more than 20 percent;
  • The rate of land tax shall be determined by the municipality, it shall range from 0.01 per cent to 3 per cent. 

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