Lithuania: Tax-Efficient Sectors
Tax-Privileged Business Sectors
A reduced rate of corporate income tax of 5% applies to micro-enterprises (turnover below LTL0.5m and fewer than 10 employees).
There are two Special Economic Zones under the Law on the Fundamentals of Free Zones, one in the port city of Klaipeda and the other in the city of Kaunas. Companies investing more than EUR1m in these zones are exempt from corporate income tax for the first six years, and receive a 50% tax offset for the next 10 years. Exemptions from property taxes and VAT apply regardless of the level of investment. It is not clear, however, that these zones have been very successful.
Since 2007 there has been a tonnage tax system for the shipping sector. Shipping operators can elect to apply the tonnage tax at the normal rate of corporate income tax to a notional value based on tonnage. The election then applies until at least 2016. The scheme applies to entities in Lithuania engaged in international transportation by ship or a directly related activity.
The measure is designed to stimulate the Lithuanian shipping sector, as ship-owners will pay a lower level of tax than in any other EU/EEA member state.