Corporate Income Tax Rates for the Tax Period of 2010 and Subsequent Tax Periods in the Republic of Lithuania

ECOVIS Miškinis, Kvainauskas ir partneriai advokatų kontora

Corporate Income tax rates for the tax period of 2010 and subsequent tax periods in the Republic of Lithuania drop to the level of 2008.

A 15 percent tax rate shall be imposed on the taxable profits of Lithuanian entities and permanent establishments unless the Law on Corporate Income Tax provides otherwise (20 percent for 2009).
A 20 percent tax rate shall be imposed on income from distributed profits.

Sponsorship received, which is used for purposes other than specified in the Law of the Republic of Lithuania on Charity and Sponsorship, as well as part of the sponsorship received in cash from a single provider of sponsorship during the tax period, which exceeds the amount of 250 MLS, shall be taxed at 15 percent (20 percent for 2009) (without any deductions).
Entities (except for non-profit entities) which meet the criteria set out below shall have the right to apply one of the following rules when calculating taxable profits:

1) taxable profits of entities whose average number of employees on the staff list does not exceed 10 and whose income during the tax period does not exceed 500,000 litas (144,900 euros) shall be taxed at a rate of 5 percent (13 percent for 2009), except for the cases specified in the next paragraph;

2) the part of the taxable profits of entities whose average number of employees on the staff list does not exceed 10 and whose income during the tax period does not exceed 1 million litas, amounting to 25,000 litas, shall be taxed at a rate of 0 percent, and the remaining part of the taxable profits shall be taxed at a rate of 20 percent, except for the cases specified in paragraph 3 of this Article. This rule shall apply to individual/personal enterprises, general partnerships and limited partnerships.

The provisions of the previous paragraph shall not apply to:

1) entities (individual/personal enterprises) whose members or family members of such members are members of other entities (individual/personal enterprises);

2) entities (individual/personal enterprises) whose members and/or family members of such members control, on the last day of the tax period, over 50 percent of shares (interests, member shares) in other entities as well as entities in which the members of the entity (individual/personal enterprise) and/or family members of such members control, on the last day of the tax period, over 50 percent of the shares (interests, member shares);

3) entities in which the same member controls, on the last day of the tax period, over 50 percent of the shares (interests, member shares);

4) entities in which the same members jointly control, on the last day of the tax period, over 50 percent of the shares (interests, member shares).

The part of the taxable profits of non-profit entities, whose income from economic and commercial activity during the tax period does not exceed 1 million litas, amounting to 25,000 litas, shall be taxed at a rate of 0 percent and the remaining part of the taxable profits shall be taxed at a rate of 15 percent (20 percent for 2009).

Taxable profits of Lithuanian entities that shall be taxed at 0 percent meet the same criteria as for 2009.