Corporate Income Tax Law. In October 2009, draft amendments to the Corporate Income Tax Law were presented to the Lithuanian Parliament. If the draft legislation is approved, most of the amendments could become effective on 1 January 2009.
One of the amendments is related to the reduction of the standard corporate income tax rate from 20% to 15% and from 13% to 7,5% for small companies with a number of employees not exceeding 10 and taxable income of up to 144,810 euro. Withholding tax should also be cut respectively from 20% to 15% for income received by non resident companies.
Income received by a Lithuanian company through a permanent establishment in a member state of the European Economic Area or in a country with which a double taxation treaty has been concluded, should not be attributed to the taxable base of this company provided that corporate income tax or a similar tax was paid for such income in a foreign country.
According to the amendments, dividends which qualify for participation exemption requirements should not be taxed irrespective of any corporate income tax incentives applied to the profit distributed. The restrictions put in place as of 1 January 2009 should be abolished. The amendments will also allow the transfer losses between the entities of groups.
Insurance premiums. According to a supplement to the commentary on the corporate income tax law, voluntary premiums for accident and/or health insurance paid on behalf of employees based on life insurance contracts are regarded as life insurance premiums. This means that such premiums are also considered limited allowable deductions which can be enjoyed if other requirements of the Law are met.