2017 tax rates at glance
- Corporate income tax rate 15%, 5%
- Personal income tax rate is 15%
- Social tax rate is as follows:
- Employee’s liability is 9%
- Employer’s liability is 30.98% (based on the number of serious or fatal accidents at work, the rate may be higher)
- Payments to the Guarantee Fund – 0.2% of the gross payroll paid to employee
- VAT standard rate is 21%, reduced rate is 5% and 9%
The minimum wage is 380 euros per month, 2.32 euros per hour.
Changes in the Value Added Tax
- 5 % VAT on uncompensated medicines which taxable value of exterior package is higher than EUR 300 from 1 January 2017.
- Entry into force of the EU Regulation No 1042/2013 provisions regarding the notion of the immovable property and services connected with immovable property.
Changes in the Corporate Income Tax
- Tax relief for free economic zone companies was enlarged, adding additional possible activities and reducing the minimum capital investment size from EUR 1 million to EUR 100 thousand.
- Tax relief for investments into modern assets was enlarged by abolishing requirement to pay back the relief in case of dividend distribution to individuals.
- Advance Corporate Income Tax was included in the “one date” tax payments simplification package and from 2017 will have to be paid until each quarter’s 15th day of the last month (15 March, 15 June, 15 September). Advance Corporate Income Tax returns shall be submitted until 15 March and (in case it was chosen by the taxpayer to calculate the tax based on previous years’ results) also until 15 September 2017 for the 3rd – 4th quarters of the year.
Changes in the Personal Income Tax and Social Security
- Social security tax base was broadened to include Board and Supervisory Council members annual bonuses (tantiemes or similar), the rate to be applied is 26.3%.
- Non-taxable income was raised to 310 euros per month if payroll is not exceeding the minimum wage. If payroll exceeds the minimum wage, non-taxable income is calculated according to the set formula. Additional non-taxable income was raised to 200 euros per family, per month and per each child.
- Life insurance and 3rd step pension funds savings tax reliefs were added a new “ceiling” and will apply from 2017 only to insurance premium of up to 2,000 EUR per year.
- Starting 2017 unemployment income shall be considered employment source income and will be taxed by 15% standard tax rate subject to deductible expenses.
- Sponsorship by attributing up to 2% of the permanent resident’s personal income tax was enlarged to the artists – it will become possible to grant sponsorship to a designated artist, registered as a valid sponsorship receiver.
- Guarantee fund shall no longer be administered by the State Tax Inspectorate but rather by the Social Security Board. Accordingly, for the periods starting from January 2017, guarantee fund contributions will have to be paid to the Social Security Board.
- Social security rate for owners of individual enterprises, members of partnerships shall increase from 26,3% to 30,8% or respectively from 28,3% to 32,8 to whose persons who make payments to 2nd step Pension Fund. These persons will be additionally insured with sick, maternity and unemployment insurance.
Starting March 2017 excise duties shall increase:
- 112% to wine and beer;
- 23% to strong alcohol.
Disclosure of Information
Financial institutions (banks, credit unions, electronic payment institutions) have to report the following information to the Tax Authorities:
- Annual turnover in bank accounts of individuals if it is not less than EUR 15,000;
- Balance in bank accounts of individuals if it not less than EUR 5,000 in the same bank;
- Data of the bank accounts of legal entities that have not filled tax returns or reported zero income;
- Interests, debts, securities, insurance and pension premiums as well as other information for the performance of the functions of the Tax Authorities;
- Data of the bank accounts of foreign residents.
- Local entities shall have to report the following information to the Tax Authorities once a year:
- Contributions of shareholders (natural persons only) exceeding EUR 15,000;
- Debts to natural persons and vice versa if the debt at the end of the calendar year is not less than EUR 15,000;
- Pay-outs to foreign legal entities for services performed in Lithuania if the value of the transactions during the year exceed EUR 15,000;
- Temporary residents working in Lithuania (i.e. “rented employees”).
The information provided above shall be submitted in 2017 for 2016, except for the report on temporary residents, which has to be submitted by the 15th of the following month.
Smart Tax Administration
Smart tax administration (i.MAS) is coming further into effect from 2017:
- i.SAF – submission of issued and received invoices, as well as i.VAZ – electronic transport documents (both started October 2016, from January 2017 the “grace period” for non-intentional mistakes is over and Tax Authorities will be able to apply penalties for noncompliance or delays);
- SAF-T – entities which sales turnover in 2015 exceeded EUR 8 million must be ready to submit accounting data to the tax authorities in the SAF-T (“standard audit file – for tax purposes”) form.
Penalties for Non-Compliance with Transfer Pricing Regulations
From 1 January 2017, penalties for non-compliance with transfer pricing (TP) regulations are becoming stricter. Manager of a company (as an individual, not the company) responsible for failure to possess a TP documentation prepared in accordance with local legislation can be fined from EUR 1,400 up to 5,800 (in case of a repeated breach).
New Administrative Penalties Code
Starting 2017 new Administrative Penalties Code is coming into effect. According to the Code, tax evasion not exceeding EUR 3 766 shall be subject to administrative rather than criminal liability.