Corporate income tax. The Lithuanian Tax Authorities have released some commentaries on the corporate income tax law. One of the commentaries refers to the way how income and expenses related to interest-free loans should be recognized for corporate income tax purposes.
According to the new rule, a company providing interest-free loans to associated parties has to include deemed interest income to its taxable income. Consequently, the company receiving such a loan may attribute the amount of deemed interest expenses to its allowable deductions.
Benefits in kind. The Tax Authorities have published a simplified order of evaluation of benefits in kind deriving from the use of a company car for private purposes. According to the order, this kind of benefits valued as 0.75% of the vehicle’s market price will have to include fuel expenses covered by the company. When a company does not compensate fuel expenses, the benefits in kind should be valued as 0.70% of the vehicle’s market value.
VAT. The Tax Authorities issued an explanation stating that Lithuanian taxable persons have a right to calculate VAT on rent of immovable property located in Lithuania supplied to taxable persons, who are VAT payers irrespective of the place where the purchaser is registered.
As of 1 January 2010, taxable persons are entitled to opt to tax advance payments received for goods/services supplied not later than within 12 months from the date when the contract was signed. In a publication the Tax Authorities explain that advance payments received from foreign taxable persons should be taxed with VAT if the services will be supplied within a period exceeding 12 months.
Collective investment funds. The Tax Authorities explained that despite the fact that a collective investment fund does not have the status of a legal entity in Lithuania, it has to be entered into the register of tax payers if it is planning to perform activities creating an obligation to register for VAT purposes in Lithuania. After registration the collective investment fund will receive a tax payer’s identification number and a VAT number.