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Wednesday, 08.05.2024, 03:46
Corporate tax exemption became applicable for service companies in Lithuania
Eimantas Kiudulas, Chairman of the Lithuanian Free Economic Zones Association, General Director of the Klaipeda FEZ |
Small service enterprises operating in free economic zones
(FEZs) and fitting capital investment and employment requirements will be also
allowed not to pay income tax for six years. Before the amendment to the law,
companies in order to get FEZ tax incentives, have to invest at least EUR 1
mln.
After a due initial incentives period, companies, which
qualified for corporate tax exemption, will be able to pay reduced income tax
by half for another 10 years.
Starting from 2017, regulatory changes will allow services
companies to establish operations and benefit from the tax incentives in FEZs.
While FEZs are first and foremost tailored for manufacturing companies, such
changes will create more favourable investment environment for small companies
in Lithuania as well,
Therefore,
Lithuania FEZs will become even more competitive in the Central and Eastern
Europe region.
“Investment’s
distribution in the country and the whole investors structure in FEZ will change.
The service enterprises have more high-value- added workers than manufactaring
companies. Accordingly their number in FEZs definitely will grow”, – says Eimantas
Kiudulas, Chairman of the Lithuanian Free Economic Zones Association, who
is also General Director of the Klaipeda FEZ.
He adds,
that FEZs in Lithuania are already prepared to satisfy such investors needs.
“The office buildings for rent are currently being constructed, investing a lot
into advanced infrastructure with the full range of services that meet the
needs of the high-value-added workers.”, – says E. Kiudulas.
As all the
free economic zones of Lithuania are operating in different regions of the
country, its expected that new tax incentives will encourage and attract
investments to these regions, not only to the capital city. Furthermore, the
good news for investors: less competition for high-value-added specialists
exists among the employers in the regions.
“The sector
of business services in Lithuania is constantly growing and last year it
reached 12 per cent of growth, counting employees in shared service centres.
New regulatory changes could be one more turning point in business services
sector growth not only in Vilnius and Kaunas, but also in other major cities of
Lithuania”, - says Rugile Andziukeviciute-Buze, Regional
Development Team Lead at Invest Lithuania.
The newly adopted tax benefits start applying only after
company receives auditor’s certification regarding the investment. Also, tax
benefits can be applied by companies delivering accounting, administration,
human resources, architectural and engineering services and related technical
consulting services, but at least 75% of company’s revenue must come from
aforementioned activities in a given fiscal year.