The Parliament and the president of Lithuania approved amendments of the Law on Corporate Income Tax (CIT) regarding new investment incentive for large projects. Qualifying investment projects will be exempt from CIT if certain conditions are met. This incentive will be applicable in 2021 – 2025 in Lithuania.
Changes in the Law on Corporate Income Tax
Based on the changes in the Law on CIT, the new incentive is applicable for entities carrying out large investment projects developed in the fields of manufacturing, data processing or web servers (hosting) and other related activities. This incentive provides a CIT exemption for up to 20 years for local and foreign entities that make qualifying investments in any area of Lithuania, if the following conditions are met:
· an entity should implement a large investment project under a valid large investment project agreement;
· the investment should amount to at least EUR 20 million (at least EUR 30 million when investing in Vilnius or its region);
· average number of workers needed for the implementation of the investment project during a taxable period should be at least 150 (at least 200 workers when investing in Vilnius or its region);
· at least 75% of the company’s income should be derived from manufacturing, data processing or web servers (hosting) and other related services;
· an entity should have an auditor’s opinion confirming that the required amount of private capital was invested.
Please note that certain other conditions might apply.
Why This Matters
The changes in the legislation should have a positive impact on businesses and Lithuanian business environment in general. It should help attract new investors and encourage investments into innovative and growth-oriented businesses and business solutions. Also, it should increase Lithuania’s regional competitiveness and create more workplaces.
The laws introducing the changes were approved by the Parliament of Lithuania on 30 June 2020 and signed by the President on 3 July 2020. The changes become effective as of 1 January 2021 and will be applicable till 31 December 2025.
Amendment to the Law on Corporate Income Tax, can be accessed at: