Lithuanian corporate income tax rate 5% specified

Together with the Law on the Budget for the year 2012 there were some tax changes made in Lithuania. The purpose of these tax changes was to stimulate the development of the small business and to balance the budget.  

There will be more small business companies who will be able to use the concessions of the corporate income tax, counting the income for the year 2012 and the following years. The company's income limit, when the company would be taxed on the easy 5% corporate income tax rate, was increased from 145.000 EUR to 290.000 EUR.The company will be allowed to apply this 5 % rate only if it satisfies the following conditions as well: the company's average number of employees does not exceed 10 and the same shareholder of the company does not have more than 50 % of shares in another company.To compare, a general corporate income tax is 15 %, so this tax concession should be very useful for small business companies. According to the data of corporate income tax declarations of the year 2010, less than 290.000 EUR turnover was declared by 56.000 companies having no more than 10 employees. It was counted that this concession could be used additionally by 11.000 enterprises whose income the previous year was between 145.000 EUR and 290.000 EUR. The government expects that these changes will encourage inhabitants to found their companies more actively.