VILNIUS - With Lithuania's increased 16 percent corporate income tax set to take effect in January, Prime Minister Gintautas Paluckas believes the rate could be raised by another percentage point, which he says would not harm businesses' finances or competitiveness.
"I don't see anything critical or dramatic if one more percentage point were added to the 16 percent that is about to come into force. I believe this won't fundamentally harm competitiveness or disturb our businesses' operations," he told a Verslo Zinios podcast.
The new prime minister said that businesses investing in technological upgrades and productivity could continue to benefit from tax incentives for investment projects.
"Those who invest in increasing productivity, innovation, and efficiency won't feel the burden of that 1 percentage point in any way, because they will have reductions and exemptions from taxable income," Paluckas said.
"That extra 1 percentage point definitely won't kill those who don't take any steps forward and rely on a different model of competitiveness, and still manage to make a profit. However, it will significantly supplement public finances," he added.
Last summer, the parliament approved a one-point increase in corporate tax to 16 percent as part of the so-called Defense Package, with the aim of boosting defense funding starting in 2025.
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