Additional taxation of banks would worsen Lithuania's investment climate, Nauseda warns

VILNIUS - Additional taxation of banks would worsen Lithuania's investment climate, President Gitanas Nauseda has warned.

Nonetheless, he called the new government's plans to apply a new tax to this sector debatable.

"When considering any new taxes on banks, we must understand that this affects certain investment conditions in the banking system," the president told reporters after a meeting with the Board of the Seimas on Tuesday.

"We cannot introduce new taxes all at once and expect that banks from Poland, Germany, and other countries will willingly come to Lithuania," he added.

According to Nauseda, potential investors in Lithuania are aware of the geopolitical threats faced by the country.

Following the tax reform implemented by the initial ruling coalition earlier this year, the new government led by Inga Ruginiene promises not to introduce any new taxes, except for banks.

A draft government program published on Tuesday spells out intentions to apply a "financial stability tax, calculated on the basis of liabilities", to banks, but does not specify what the new tax might look like.

Ruginiene was also unable to provide detailed information about the new tax to the public broadcaster LRT's program Forumas on Monday, stating it was being initiated by the ruling coalition partners.

Nauseda said he could not comment on the specific proposal for a financial stability tax because this idea had not been presented to him in detail. He said, however, that with the bank solidarity contribution nearing its expiry, "its extension could be considered".

The so-called bank solidarity contribution introduced temporarily several years ago is set to expire this year. The state expects to generate approximately 590 million euros in revenue from the levy in 2023-2025.

The contribution is charged on the part of net interest income that exceeds the average of the four years by more than 50 percent.

In June 2024, the then ruling Conservatives extended the tax introduced in 2023 for defense needs for another year.