Personal income tax (PIT)
The amended pension accumulation system does not change the procedure of deducting costs as set forth in the Law on Personal Income Tax.
As of 1 January 2014, the system of an accumulated contribution (the so-called 2nd stage pension) shall be applied according to which the participants, who have chosen this system, shall pay the following contributions:
- 2 percent of the participant‘s income on which state social insurance contributions are calculated;
- Additional 1 percent of the participant‘s income, on which state social insurance contributions are calculated, paid from the participant‘s funds;
- Additional 1 percent of the duly calculated average gross salary in Lithuania to be paid from of the state funds.
The State Tax Inspectorate under the Ministry of Finance (the STI under MF) informs that in accordance with the provisions of Par. 5, Art. 21 of the Law on Personal Income Tax these contributions of the 2nd stage pensions shall not be deemed to be deductible from the person‘s taxable income on which PIT is calculated.
Form FR0471 of the certificate of B class payments and the rules for completion of the form were reworded.
By order No. VA-74 of the Head of the State Tax Inspectorate under the Ministry of Finance, the Form FR0471 and the rules specifying the completion of the form and the procedure of its filing (the Rules) were reworded.
- Additional sheet FF0471PU of Form FR0471 was supplemented with additional field 31 where the date of birth of the non-resident of Lithuania shall be filled in;
- The form and additional sheets FR0471P and FR0471PU were supplemented with field 12.1 where it should be specified what kind of the identification code of a resident or a non-resident of Lithuania is indicated in field 12:
- Personal ID code or
- Number of a business certificate, or
- VAT payer‘s code, or
- Number of the certificate for individual activities, or
- Series and number of a document evidencing the person’s identity;
- Forms FR0471 and FR0471P were supplemented with field 30 which should be filled in cases, when a person making the payments pays interest as a mediator. In such a case the code of the state, where the source of the payments is located, should be filled in;
- Appendix 1 of the Rules was supplemented with new codes of income types to be used for reflection of different taxation peculiarities of interest paid (on deposits, loans and securities) in 2014 and later.
It should be noted that new version 5 of Form FR0471 shall be filed and a new wording of the Rules shall be followed when declaring B class income paid in 2014 and later. Amounts paid in 2013 and in previous tax periods shall be declared by using version 4 of Form FR0471.
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Corporate income tax (CIT)
The Rules for Determining a Tax Period were amended.
The rules for determining a tax period of taxable entities considering the peculiarities of their activities were reworded. Major amendments include the following:
- A request to determine a different taxable period may be filed electronically via the authorised electronic services system Mano VMI or delivered directly or sent by mail to a respective tax authorities office.
- The beginning of the taxable period shall start from the 1st day of a calendar month.
- A request shall not be considered if the tax period has already been changed during the last 5 years, unless the period has been changed not to the calendar year and it is requested again to determine the tax period that matches with the calendar year.
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Value added tax (VAT)
Regarding the requests of foreign taxable entities to refund VAT paid in the Republic of Lithuania.
The State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania informs that in accordance with Order No. VA-67 (hereinafter referred to as the Order) of 14 October 2013, the previously effective order No. 339 Regarding the Requests of Foreign Taxable Persons to Refund VAT Paid in the Republic of Lithuania was amended.
The major amendment implemented by the Order: form FR0445 (a request of a taxable person established outside the territory of the EU to refund VAT) may be filed electronically via Mano VMI along with other requested documents (VAT invoices etc.). Furthermore, some editorial amendments were made in the form and the rules for completion of the form were amended accordingly.
Regarding the rules for filing the documents by an individual who has acquired a new vehicle from another EU Member State and VAT calculation.
Rules for filing of documents by an individual who has acquired a new vehicle from another EU member state and VAT calculation (hereinafter referred to as the Rules) were amended. The major amendment is that as of now the documents related to the vehicle acquired (a copy of a VAT invoice and a free form notification on the acquisition of a vehicle) may be filed electronically via the electronic services system of the STI Mano VMI. It should be noted that the tax administrator may also file VAT calculation (Form FR0656) for the newly acquired vehicle to an individual electronically via Mano VMI.
Re issuance of the certificate which confirms VAT payer‘s registration.
The rules for the issuance of the certificate which confirms VAT payer‘s registration (hereinafter referred to as the Rules) and the certificate which confirms VAT payer‘s registration (Form FR0730, hereinafter referred to as the Certificate) were amended and reworded. Major amendments and supplements to the Rules:
- A term of 3 days for consideration of a request was established.
- A VAT payer may file an adjusted request to issue the Certificate (if required by the tax administrator) directly, send by mail or provide electronically via electronic services system Mano VMI.
- In the event the data are adjusted, the Certificate shall be issued not later than the next working day after the data are received.
- The Certificate may be issued only with regards to the types of economic activities which are specified in the data of the VAT payers‘ register (if the VAT payer is engaged in other activities, the data of the register shall be updated).
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A version of the Combined Nomenclature to be applied as of 2014 was prepared.
The European Commission announced a new version of the Combined Nomenclature (hereinafter referred to as the CN) which shall be applicable as of 1 January 2014.
The new version of the CN applicable as of 2014 is available here.
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The rules for the guarantee of the implementation of obligations of a registered recipient were amended.
By Resolution No. 941 of the Government of the Republic of Lithuania of 16 October 2013, the Schedule of the Procedure of the Calculation and Adjustment of the Cash Deposit for Ensuring Implementation of Obligations of a Registered Recipient of Excise Goods was supplemented and amended.
The resolution comes into force as of 1 January 2014.
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The rules regulating completion of the forms related to the application of international double taxation avoidance treaties were amended.
The amendments of the rules specify a possibility for filing of a request to issue a certificate confirming the residence place (DAS-4) electronically via the authorised electronic system of The State Tax Inspectorate (the STI) Mano VMI. The certificate with the letterhead of the STI under the MF is issued by the tax administrator.
The rules also set forth that a person, seeking an approval of the residence status, may provide the STI with forms issued by tax administrators of foreign states with which double taxation avoidance treaties are signed.
The certificate confirming the place of residence may be sent to the requester by mail or issued in a respective county STI office if the request for the certificate is handed directly to a state officer of the county STI and it is not indicated in the request that the certificate is expected by mail.
A guide to the applicants for the rescheduling or apportioning of a tax underpayment.
A guide of the State Tax Inspectorate to the applicants for the rescheduling or apportioning of a tax underpayment was prepared. It is available here.
The procedure of filing of electronic enquiries was amended.
As of 21 October 2013, all electronic enquiries may be filed only via the personal domain of a tax payer Mano VMI. The answers to the enquiries filed in such a way will also be provided in the system Mano VMI.
The State Tax Inspectorate (the STI) provides the following advantages of the new procedure of electronic enquiries:
- immediate investigation of enquiries,
- a tax payer can see all its enquiries in one location and is able to monitor the progress,
- answers to the enquiries may be more detailed as the tax payer is identified via the electronic system Mano VMI,
- data safety and confidentiality is ensured.
A tax payer will further be able to file written enquires with the STI by mail or deliver directly to the county STI.
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Tax morality, transparency and BEPS Action Plan.
Recent years saw an unprecedented attention to taxation issues on many different levels: from media to highest ranking public officials. Concepts such as “fair” amount of tax, increased tax transparency and even economic patriotism have entered national and international discussions. Recognising and appreciating fundamental changes in international attitudes and approaches to tax may hold a key to successful reputational and tax risk management locally.
Thus KPMG has prepared a publication on tax morality, transparency and Base Erosion and Profit Shifting (BEPS) Action Plan to share our insights and recent international developments. The publication is intended for CFOs, tax directors and tax professionals who are interested in international developments and how they may translate to the local Lithuanian initiatives.
The publication can be found here.
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The failure to pay a salary for two months is the basis for termination of an employment contract.
The Supreme Court of Lithuania (the LSC), having investigated a law-case regarding redundancy, has stated that in accordance with Par. 1, Art. 128 of the Labour Code an employee has the right to terminate the employment contract with an indefinite period of time or the employment contract with a term longer than 6 months if the salary is not paid for more than two months consecutively.
The LSC has explained that the term does not imply the duration of the delay to pay the salary but the period for which the employer does not pay or only partly pays the employee‘s salary. For example, a salary shall be paid to an employee until the 10th day of next month and the salary for January and February was not paid before 10 March. A situation occurs on 11 March when the salary has not been paid for two months. Consequently, the employee has legal grounds to terminate the employment contract.
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The newsletter has been prepared in accordance with legislation effective as at 12 November 2013 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.