Lithuania's corporate taxation system includes various direct and indirect taxes, with CIT and VAT being the most significant taxes for companies operating in the country. Understanding the various tax rates, tax brackets, and legislation is crucial for corporations doing business in Lithuania.
Corporate Income Tax
Corporate Income Tax (CIT) in Lithuania is a direct tax levied on the net income of companies operating in the country. The Law on Corporate Income Tax (Lietuvos Respublikos įmonių pelno mokesčio įstatymas), along with subsequent amendments, governs corporate income tax in Lithuania.
Domestic Companies:
Domestic companies in Lithuania are taxed on their worldwide income. As of 2021, the standard CIT rate is 15%. A reduced CIT rate of 5% applies to small enterprises meeting specific criteria, and a 0% rate applies to investment funds, pension funds, and certain non-profit organizations.
Foreign Companies:
Foreign companies with a permanent establishment in Lithuania are subject to CIT only on the income attributable to the Lithuanian permanent establishment. The standard CIT rate of 15% applies.
Value Added Tax (VAT)
VAT (Pridėtinės vertės mokestis) is an indirect tax in Lithuania, applicable to the sale of goods and services. The Law on Value Added Tax governs VAT in Lithuania. VAT is levied on every stage of the supply chain, from production to consumption. There are three VAT rates in Lithuania:
- Standard rate: 21% (applied to most goods and services)
- Reduced rate: 9% (applied to specific goods and services, such as books, newspapers, and certain food products)
- Low rate: 5% (applied to certain goods and services, such as medical equipment and pharmaceuticals)
Sales Tax
Lithuania does not impose a separate sales tax, as the VAT system covers the taxation of goods and services.
Import Duties
Import duties in Lithuania are governed by the European Union (EU) customs legislation, as Lithuania is a member of the EU. Lithuania follows the EU's Common Customs Tariff (CCT) for imports from non-EU countries. Import duties vary depending on the product and its classification under the Combined Nomenclature (CN) code. Rates can range from 0% to 17% or higher, depending on the type of goods. In addition to import duties, imported goods are also subject to VAT.
Export Duties
Lithuania, as an EU member, does not impose export duties on goods exported to other EU countries. For exports to non-EU countries, Lithuania follows the EU's export regulations, which generally do not impose export duties except in specific cases, such as the export of certain agricultural or cultural goods.
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