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Lithuania Enacts Corporate Tax And VAT Changes
by Ulrika Lomas,, Brussels
17 January 2018

Enhanced corporate tax incentives and certain changes to value-added tax rules have been introduced in Lithuania as part of the 2018 Budget, approved by parliament in December.

Under the new law, effective January 1, 2018, newly established companies can benefit from a zero percent corporate tax rate for the first year of operations, provided that annual income does not exceed EUR300,000 (USD367,000) and the company employs no more than 10 employees on average. However, shareholders must be natural persons, and the company must not be reorganized or cease trading for the first three tax years.

In addition, companies can claim a reduced five percent rate of corporate tax on the share of profits generated by the use of the research and development-based intangible assets. Companies may also benefit from an enhanced deduction on R&D spending.

Furthermore, the new law increases the allowed reduction of taxable profit related to investment in certain fixed assets from 50 percent to 100 percent. These assets include computer equipment, software and intellectual property rights, machinery and equipment, and road transportation vehicles such as trucks.

With regards to VAT, thermal energy equipment qualifies for the reduced nine percent rate of VAT under the new laws, and all non-reimbursable prescription medicines is subject to VAT at five percent, a measure intended to increase access to medicines.

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EU to remove several countries from tax haven blacklist

BRUSSELS (Reuters) – European Union officials have proposed removing eight jurisdictions from the blacklist of tax havens the bloc adopted in December, in what critics may see as a blow to its campaign against tax avoidance.

EU states decided last month to draw up the list in a bid to discourage the most aggressive tax dodging practices.

But eight of the 17 jurisdictions currently listed are set to be quickly removed from the list after they offered to change their tax rules, according to EU documents seen by Reuters.

Panama, South Korea, the United Arab Emirates, Barbados, Grenada, Macao, Mongolia and Tunisia are the jurisdictions that EU officials have recommended be delisted.

The removal of Bahrain was also initially considered, but its delisting was eventually not recommended, the documents show.
The proposal will be discussed at a meeting of EU ambassadors on Wednesday and is expected to be adopted by EU finance ministers when they meet next week in Brussels for monthly talks.

Jurisdictions set to remain on the blacklist are American Samoa, Bahrain, Guam, the Marshall Islands, Namibia, Palau, Saint Lucia, Samoa, and Trinidad and Tobago.

The proposal for the delisting was made by the so-called Code of Conduct Group, which gathers tax experts from the 28 EU member states. It monitors countries’ commitments to abide by EU standards on tax matters.

If the recommendation were confirmed by EU ministers, the eight jurisdictions will be moved to a so-called gray list which includes those who have committed to change their rules on tax transparency and cooperation. The gray list currently includes 47 jurisdictions.

The shrinking of the blacklist is likely to be criticized by tax transparency groups. In December some activists denounced the listing process as a whitewash and had called for the inclusion in the blacklist of some EU countries accused of facilitating tax avoidance, like Luxembourg, Malta, Ireland and the Netherlands.

The recommended removal of Panama may cause particular outcry, as it has been at the center of one of the largest disclosures of offshore schemes, the so-called Panama Papers.
EU officials have said the purpose of the blacklist is to convince jurisdictions to become more transparent. Having fewer on the list means more countries have committed to changes, they say.

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