The Seimas has ratified the Treaty on Double Taxation Avoidance concluded between Lithuania and Mexico.
By the Law of 3 October 2012, the Seimas of the Republic of Lithuania ratified the Treaty on Double Taxation Avoidance and Prevention of Tax Concealment.
The Treaty will come into force on 29 November 2012.
The Regulations on Release from Penalties, Late Payment Interest and Interest were amended.
By order No. VA-89 of the head of the state tax inspectorate under the Ministry of Finance of 1 October 2012 the Regulations on Release from Penalties, Late Payment Interest and Interest (hereinafter referred to as the Regulations) were amended.
The administrative burden for taxpayers is reduced by the following amendments:
• A possibility to file an application regarding release from penalties, late payment interest and/or interest online is provided. The application shall be signed by an electronic signature.
• The tax administrator should not require to provide the data which are at the disposal of the tax administrator. For example, it is not obligatory to specify an amount of late payment interest and/or interest.
• A possibility to file an application to the central tax administrator (instead of the local tax administrator) for major taxpayers is provided.
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Personal income tax (PIT)
The commentary of Par. 2, Art. 6 of the Law on Personal Income Tax was amended and supplemented.
The commentary of the Law on PIT specifies that income of a member of a small partnership received from the distributable profit of the partnership, except for the part of the income of a member of a small partnership treated as related to employment relations or relations corresponding to the essence of employment relations, shall be subject to a 20 percent income tax.
The commentary also sets forth that the distributable profit received by non-residents of Lithuania from an unlimited liability company shall be subject to a 15 percent income tax rate taking into account the provisions of the double taxation avoidance treaty concluded by Lithuania with the state to the resident of which the amount is paid (if the treaty provides for a lower tax rate, the tax rate prescribed by the treaty shall apply).
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Social insurance contributions
The social insurance authorities (SODRA) inform about the implementation of the measure Support for the First Employer.
The Board of the State Social Insurance Fund has made an announcement in the press that part of labour remuneration will be compensated to the employees who are of an age ranging from 16 to 29 and are employed in Lithuania for the first time. The status of the person employed for the first time shall be retained not only when the labour contract is concluded for the first time, but in the period of 12 months since the first employment (i.e. in the period of 12 months a person may be employed several times).
The compensation amount of the remuneration shall be calculated applying a fixed rate which equals to 0.233 Litas for one Litas of remuneration calculated to the employee in a respective month (for the calculation of the compensation amount the calculated remuneration is multiplied by 0.233). The maximum remuneration on which the compensation shall be calculated for one employee, may amount up to 1,700 Litas per month.
The beginning of the partial compensation of remuneration shall not be earlier than 1 August and not later than 30 September 2015. The remuneration compensation may be provided for 12 calendar months starting from the first working day of the person employed for the first time.
It is expected that employers will be able to file applications for the support already in November. For the measure Support for the First Employer, an amount of the EU funds amounting to 32 million Litas was assigned.
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Value added tax (VAT)
The Regulations for Completion of the VAT Return were amended.
By Order No. VA-97 of the head of the state tax inspectorate under the Ministry of Finance of the Republic of Lithuania, dated 25 October 2012, the provisions of the Order On the Approval of the Value Added Tax Return and Other Forms Related to this Tax and their Completion Regulations were amended.
The procedure of completion of field 26 of Form FR0600 was amended in the completion regulations specifying that a VAT payer has the right to include import VAT, which has not yet been paid to the customs account, in this field.
Furthermore, the procedure of completion of Form FR0600 was amended taking into account the new procedure of recognition of an import VAT at the tax authorities.
The Regulations of Issue of Accounting Documents Used for Calculation of Taxes were amended.
By Resolution No. 1240 of the Government of the Republic of Lithuania of 10 October 2012, Resolution No.780 of the Government of 29 May 2002 On Approval of the Regulations for the Issue of Accounting Documents Used for Tax Calculation was amended. The resolution approved the Regulations of Issue and Recognition of Accounting Documents Used for Tax Calculation (hereinafter referred to as the Regulations). The major amendments to the Regulations concerning application of VAT provisions are as follows:
• Par. 9 of the Regulations was supplemented with a provision that documentation of the supply of goods (services) by VAT invoices as well as advance payments shall be performed not only in accordance with provisions of Art. 79 but also Art. 78-1 of the Law on VAT which prescribe requirements for documentation of supply of goods and provision of services by a VAT invoice (applicable as of 1 January 2013).
• Par. 10 of the Regulations was supplemented with a provision that in the cases when a simplified VAT invoice is issued, the references specified in Par. 9, Art. 80 of the Law on VAT shall be indicated except for the cases set forth in the Regulations (applicable as of 1 January 2013).
• Par. 16 of the Regulations specifying the right to document all supplies of goods (services) by one joint VAT invoice becomes void as starting from 1 January 2013 this right is set forth by Par. 6, Art. 79 of the Law on VAT.
• The regulations were supplemented with Par. 19.5 according to which a VAT invoice is not used when goods are supplied (services provided) to an individual, who in accordance with the Law on VAT is not a taxable person, through slot-machines venders which meet all technical, usage and the generated revenue accounting requirements.
• Par. 20 of the Regulations was supplemented with a provision that in the case when a simplified VAT invoice is issued to an individual, at his request other references not specified in Par. 9, Art. 80 of the Law on VAT shall be indicated in the VAT invoice as well (applicable as of 1 January 2013).
• The Regulations were supplemented with par. 20-1., 20-2. which specify the procedure of the issue of a free-form accounting document, by which a supplier of goods (provider of services) shall formalise the recognition of a debt as bad and attribution of a VAT amount to the debt, as well as the references to be specified in this document.
• As of 1 January 2013, Section V of the Regulations Issue of Credit and Debit Documents and Their Use became void. Credit and debit documents shall be issued in the manner specified in Art. 83 of the Law on VAT.
A commentary of Art. 78-1 of the Law on VAT was prepared.
The state tax authorities have prepared a commentary of Art. 78-1 regarding formalisation of supply of goods and services by a VAT invoice. Practical cases are also described in the commentary.
The commentary will come into force as of 1 January 2013.
The Regulations of an Evidence when Goods Are Deemed to be Lost due to Force Majeure or Criminal Activities of Third Parties were amended.
As of 28 October 2012, the Regulations of an Evidence when Goods Are Deemed to be Lost due to Force Majeure or Criminal Activities of Third Parties approved by Resolution No. 861 of the Government of 12 June 2002, came into force (hereinafter referred to as the Regulations).
The provision of the Regulations, specifying that if an entity chooses not to adjust VAT deduction or not to pay VAT for goods lost due to criminal actions of third persons, it should have a document confirming that a pre-trial investigation has been initiated. Before the amendment, it was established that the entity should have a document that criminal proceedings have been taken.
Par. 8 of the Regulations was supplemented with a provision that VAT deduction should be adjusted or VAT should be paid for the goods placed under customs supervision when it occurs that the goods are lost not due to criminal activities of third persons.
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Declaration of the Property of Residents
The Law on Declaration of the Property of Residents was amended.
By the amendment to the Law, the list of job positions (reasons), due to which an obligation of property declaration occurs, was supplemented. Furthermore, articles of the law regulating the procedure of the property declaration were adjusted.
The provisions of the Law will come into force as of 1 January 2013.
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Amendments to 24 business accounting standard „Income tax“.
Due to amended provisions of the Law on Corporate Income Tax of the Republic of Lithuania and other business accounting standards, Paragraphs 3, 14.4, 16, 17.4, 18, 23, 30, 42, 43, 43.5 of 24 business accounting standard „Income tax“ were amended, Paragraph 43.5 was deleted, numbering of Paragraphs 43.3, 43.4 and 43.5 was changed. The amendments will come into force as of 1 January 2013.
Order No. VAS-17 of the Director of the Authority of Audit and Accounting of 10 October 2012.
38 business accounting standard „Accounting and Financial Statements of Unlimited Civil Liability Legal Entities and Small Partnerships was approved.
This standard sets forth the requirements of accounting as well as the composition, content and compilation of sets of financial statements of unlimited liability legal entities (limited partnerships, general partnerships and individual enterprises) as well as small partnerships. As of 1 January 2013, 39 Business Accounting Standard will replace 36 Business Accounting Standard as this standard becomes void as of this date.
Order No. VAS-18 of the Director of the Authority of Audit and Accounting of 16 October 2012.
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The newsletter has been prepared in accordance with legislation effective as at
9 November 2012 which is subject to change retroactively or prospectively and any such change might affect the contents of the newsletter. We accept no obligation to update you should law or understanding change the contents of the newsletter in the future.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.