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Tax and Legal Newsletter, March 2014


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TAX NEWS

THE COMMENTARY OF THE LAW ON CORPORATE INCOME TAX HAS BEEN AMENDED

The State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania (hereinafter − STI under MF) announced the updated Commentary of Section 5 to Article 5 Paragraph 2, Section 3 to Article 5 Paragraph 6, Section 1 to Article 9 Paragraph 2, Section 1 to Article 18 Paragraph 3 of the Law on Corporate Income Tax (hereinafter – Law on CIT).

The Commentary clarifies the calculation of income threshold of the tax period, i. e.:

- if a Lithuanian entity performs activities through a permanent establishment in a foreign state, then, while calculating income of a tax period, total income of the Lithuanian entity and income earned abroad through a permanent establishment, including a permanent establishment, which income is not included in the tax base according to Article 4 Paragraph 1 of the Law on CIT, is calculated;
- if a foreign entity performs activities through a permanent establishment in Lithuania, then, while calculating income of a tax period, total income of a foreign entity, including income earned through a permanent establishment in Lithuania, has to be calculated;
- dividends, which are received from Lithuanian and foreign entities, are excluded from the calculation of income threshold.

More information is available here.

THE COMMENTARY OF THE LAW ON VALUE ADDED TAX HAS BEEN AMENDED

STI under MF has updated Commentary of Section 7 to Article 92 Paragraph 1 of the Law on Value Added Tax (hereinafter – Law on VAT).

The Commentary clarifies that:

- a tour operator, who provides tourism services for final users (sells single tourism services or travel sets) where the margin scheme is applicable and which are considered to be provided in the territory of the state under Article 101 Paragraph 2 of the Law on VAT, and who was required to submit an application for registration as a VAT payer, but failed to do so, has to calculate VAT payable to the budget for the provided services according to the provisions of the margin scheme.

More information is available here.

THE COMMENTARY OF THE LAW ON VAT HAS BEEN AMENDED

STI under MF has updated Commentary of Section 5 to Article 41 Paragraph 2 of the Law on VAT.

The Commentary clarifies that:

- 0 percent VAT rate can also be applied to goods acquired by diplomatic missions or consular posts of the Republic of Lithuania or other states located in third countries (e.g. Russian Federation, Belarus, Ukraine, Norway and etc.) (hereinafter – Mission), if goods have been acquired in the Republic of Lithuania and have been transported  (i.e. exported) from the Republic of Lithuania to the third country using transport of a Mission or transport hired by a Mission (a buyer of goods);
- 0 percent VAT rate can be applied only, if the seller of goods has documents, proving the fact of dispatch of goods from the EU territory (i.e. export of goods).

More information is available here.

LEGAL NEWS

AMENDMENTS TO THE CODE ON CIVIL PROCEDURE HAVE BEEN ADOPTED

On 13 March 2014 the Parliament of the Republic of Lithuania adopted amendments to the Code on Civil Procedure (hereinafter – the Code) that supplements the Code with a new chapter establishing collective action institution.

The institution of collective action aims at shortening the civil process, uniforming the case-law of identical or similar cases, reducing the costs of civil process for both the state and the parties to the civil process.

The amendments to the Law establish:

- a collective action may be submitted if no less than 20 natural persons or legal entities lay a claim and these persons have expressed their consent to participate in a collective action in writing (an opt-in system);
- mandatory procedure of extra-judicial resolution of the dispute (prior to bringing a case to the court a claim be presented to the defendant);
- the collective action must be based on identical or similar factual circumstances (the requirement for the collective action to be associated exclusively with public interest is withdrawn);
- the group of plaintiffs must have a representative that signs the action on behalf of the group and along with the attorney-at-law of the group participates in proceedings while representing the interests of the group;
- the group must have a representing attorney-at-law;
- a general stamp duty of LTL 500 for non-pecuniary claims while stamp duty for pecuniary claims is calculated according to general rules;
- collective actions are adjudicated in district courts as courts of first instance.

The Code shall come into effect on 1 January 2015.

More information is available here.

AMENDMENTS TO THE LAW ON ELECTRICITY HAVE BEEN ADOPTED

On 13 March 2014 the Parliament of the Republic of Lithuania adopted amendments to the Law on Electricity (hereinafter – the Law) that executes national implementation of the Directive 2009/72/EC of the third EU energy packet.

The amendments to the Law establish:

- the National Commission for Energy Control and Prices (hereinafter – the Commission) approves the methodology underlying price calculation for the use of interconnectors as well as rules on the management of transmission networks and interconnectors of transmission system operator’s transmission, determination of its throughput, distribution and congestion management;
- the Commission is also responsible for monitoring and evaluating the execution of the network development;
- provisions stating that the contractual arrangements concluded with consumers must be transparent, fair and non-discriminatory; rights, obligations and liability of the parties must be stated in clear and comprehensible language, without establishing any excess administrative and (or) procedural requirements that may serve as the basis for restricting the right of consumers to make use of rights established in the Law and other legal acts.

The Law came into effect on 20 March 2014.

More information is available here.

AMENDMENTS TO THE LAW ON NATURAL GAS HAVE BEEN ADOPTED

On 13 March 2014 the Parliament of the Republic of Lithuania adopted amendments to the Law on Natural Gas (hereinafter – the Law) which aims at national implementation of the Directive 2009/73/EC by the European Parliament and Council.

The amendments to the Law establish:

- general settlement rules and consumer protection from unfair or misleading selling methods;
- criteria that has to be assessed by the National Commission for Energy Control and Prices in deciding on appointment a distribution system operator that is related to third countries;
- provisions on functional unbundling of storage systems operators;
- the economic and management supervision rights of the parent company in respect of the distribution system operator.

The Law came into effect on 20 March 2014.

More information is available here.

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Head of Tax & Legal department
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Phone:
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