official translation

official translation official translation REPUBLIC OF LITHUANIA LAW ON TAXES ON PROFITS OF LEGAL PERSONS 31 July 1990, No. I-442 Vilnius (As amended by 11 July 2000 No. VIII-1818) 1. Taxable Entities and Taxable Object Article 1. A profit tax shall be imposed on:

1. a)enterprises with rights of legal persons, the activities whereof are regulated by the Republic of Lithuania Law on Enterprises;
2. b)legal persons engaged in non-commercial activities who nevertheless received income from commercial-economic activities, with the exception of the Bank of Lithuania, the State enterprise Deposit Insurance Fund and non-budgetary resources of institutions whose expenditures are fully reimbursed from the State Budget;
3. c)foreign state enterprises the activities whereof are regulated by foreign state laws and the headquarters whereof are located in the foreign state - in the manner prescribed by this Law;
4. d)permanent establishments. A foreign state enterprise shall be considered having a permanent establishment if in Lithuania it: permanently engages in the conduct of business activities or part thereof; or engages in its business activities through its dependent representative (agent); or uses a building site, or construction, assembly or equipment facility; or equipment or structure used for natural resources prospecting or extraction, including the wells or vessels used for the purpose. The definition of permanency of business activities, the criteria of dependence or independence of a representative (agent) shall be established by the Government of the Republic of Lithuania or the body authorised by it. Article 2. The object on which the profit tax of legal persons of the Republic of Lithuania shall be imposed is the taxable profit computed according to the procedure established in Chapter 2 of this Law. Taxable object of foreign state enterprises shall be: the total amount of income received from legal persons of the Republic of Lithuania and permanent establishments of foreign state enterprises in the Republic of Lithuania (except in cases where payments are made out to the foreign state enterprises from their permanent establishments) without any deduction of costs, unless this Law establishes otherwise, for services provided in the spheres of marketing, consulting, agency, design-construction, labour organisation, management co-ordination, for the lease of property, for the sale or other disposition of immovable property where the immovable property is subject to registration in the Register of immovable property; royalties; fees for the copyright and related rights transferred or granted under the copyright licensing agreement, also for the rights to use patent for invention rights, industrial design, semiconductor topography, trade and service mark, name of the firm, secret formula or method, franchise, payment of damages for the infringement of copyright or related rights or compensation for the infringement of copyright or related rights interest, except for interest on loans extended by foreign banks and international financial institutions (institutions or organisations all members or founders whereof are governments of several states, also funds of foreign states, state financial institutions, over 50% of shares wherein are held by foreign state governments) as well as interest on the debentures issued by the economic entities of the Republic of Lithuania and securities issued by the Government, local governments of the Republic of Lithuania and international financial organisations whose member is the Republic of Lithuania. Taxable object of foreign enterprises registered in the states or zones which are tax havens (territories, where taxes are lower than in the Republic of Lithuania) shall be the income of said enterprises received from legal persons of the Republic of Lithuania and permanent establishments of foreign state enterprises in the Republic of Lithuania (except where payments are made to foreign state enterprises from their permanent establishments). The list of such states (zones) and the types of taxable income as well as the procedure of payment of tax shall be drawn up by the Government of the Republic of Lithuania or the body authorised by it. 2. Assessment of Taxable Profit Article 3. The total of sales revenue and non-operating revenue (hereinafter - gross income) shall constitute the basis for computing the amount of the taxable profit. Sales revenue shall comprise the products, other material valuables sent from the enterprise, works performed, and services provided, including income from the lease of property, compensatory allowances and the amount of debts repaid, which prior to the beginning taxable period had been deducted from the taxable income as the amount of bad debts calculated in Article 5 paragraph 1(15 of this Law. When fixed assets, including construction in progress, are sold below their residual value, the amount of sales revenue shall be not less than the residual value of the assets. Proceeds form the sale of assets of an enterprise declared bankrupt shall not be attributed to sales revenue. Non-operating revenue shall comprise income not related to the manufacture and sale of products and provision of services, including income received for the invested property, interest, the used portion of subsidies and grants, income received due to favourable changes in the exchange rate. When computing taxable profit, the following income shall be eliminated from non-operating revenue: 1) dividends received (after deduction of profit tax) from the enterprises of the Republic of Lithuania and dividends received from foreign state enterprises (on which profit tax has been paid) as well as interest on debentures issued by the economic entities of the Republic of Lithuania and on the securities issued by the Government and local governments of the Republic of Lithuania also international financial organisations whose member is the Republic of Lithuania, also income from the sale in the secondary market of the securities issued by the Government and local governments of the Republic of Lithuania also international financial organisations whose member is the Republic of Lithuania, except for income from broker’s services related to trade in the above securities in the secondary market; 2) the share of profit received by holders of member’s shares from other enterprises; 3) insurance benefits received from insurance companies (insurers); 4) the share of income (profit) received by founders from individual (personal) enterprises or from partnerships; 5) sums received for charity and sponsorship regulated by the Republic of Lithuania Law on Charity and Sponsorship; 6) income of all religious communities and centres (administrative institutions of higher level): donations, income from the sale of property received as charity, provided said income is assigned for building, renovation and reconstruction of the house of worship, also for charity, culture and education; 7) received penalties and default interest; 8) the amounts after the fixed assets revaluation in the cases and according to the procedure laid down by the Government of the Republic of Lithuania; 9) admission and membership fees; 10) the balance of the organising fund of insurance companies according to the procedure established by the Law on Insurance; 11) sea and air port, air traffic control and air navigation service fees and funds collected as sea port land rent. Income (funds) assigned under the Law on Forestry of the Republic of Lithuania for the formation of the Forest Fund as well as shares issued to shareholders free of charge, in proportion to the number of shares held by them, from the funds of the enterprise or due to the increase in the property value, or the amount whereby the par value of the formerly issued shares is increased shall be excluded from gross income. Article 4. The total taxable profit shall be determined by deducting from gross income the production sales costs, and the costs of works and services specified in Article 5, also funds assigned for investment (upon choosing the computation method established in Article 21, paragraph 1, subparagraph 2). The amount of the total taxable profit shall be reduced by the tax-exempt amounts assigned for charity and sponsorship specified in Article 6 and payments from profit on which the natural persons income tax is levied. Taxable profit which is profit subject to taxation shall be established upon deducting the above amounts. If the enterprise shows a loss (negative results) during the taxable year, it shall be permitted to carry the losses over to the following taxable year. The carry-over of the taxable year losses shall be permitted for the maximum period of five taxable years measured from the year following the formation of losses. No carry-over of losses shall be permitted upon the expiry of the five-year period. The taxable year shall coincide with the calendar year. The procedure for carrying over tax year losses shall o be established by the Minister of Finance. For taxpayers engaged in seasonal activities the central tax administrator may at their request set a different taxable period, provided that the period shall be fixed (not subject to changes) and last for 12 months. The list of such taxpayers shall be approved by the central tax administrator. Taxable profit of legal persons engaged in non-commercial activity shall be computed as difference between the income from paid services and works and their performance costs. The earned taxable profit of head offices shall be established in accordance with the procedure prescribed by the Government of the Republic of Lithuania or the body authorised by it. Article 41. Enterprises which hold cash and cash-and-prize lotteries, except for those whose founder is the National Olympic Committee of Lithuania, the Department of Physical Education and Sports at the Government of the Republic of Lithuania, the Lithuanian Society of the Child, the Lithuanian Society for the Disabled, the Union of People with Disabilities and the Lithuanian Society for the Blind and Partially Sighted shall pay into the budget 13% of income from the sales at nominal value of lottery tickets (cards). Enterprises which hold cash and cash-and-prize lotteries, whose founder is the National Olympic Committee of Lithuania, the Department of Physical Education and Sports at the Government of the Republic of Lithuania, the Lithuanian Society of the Child, the Lithuanian Society for the Disabled, the Union of People with Disabilities, the Lithuanian Society for the Blind and Partially Sighted shall pay into the budget 5% of income from the sales at nominal value of lottery tickets (cards) and shall in a mandatory manner allot to charity and sponsorship 8% of income from the sales at nominal value of lottery tickets (cards). The procedure of payment into the budget of the prescribed amount of income and of allotting the required amount to charity and sponsorship, also the lists of sponsors and beneficiaries of sponsorship shall be specified by the Government of the Republic of Lithuania. Tax concessions established in paragraph 2 of Article 6 shall not apply to the mandatory amounts allotted to charity and sponsorship as prescribed by this Article. Enterprises which hold cash and cash-and-prize lotteries shall pay the tax on profits of legal persons in the manner prescribed by this Law. Article 5. When computing the total taxable profit, the following actual costs of gaining the income the shall be eliminated from the gross income of the enterprise: 1) material costs and other comparable costs, including costs related to the negative effects of changes in the exchange rate, also the used portion of subsidies and grants; 2) depreciation charges providing for the replacement of long-term assets (tangible and intangible) - in accordance with the procedure established by the Government of the Republic of Lithuania; 3) labour costs; 4) social insurance contributions; 5) insurance contributions prescribed by the Law on Insurance of the Republic of Lithuania; 6) taxes, levies and other mandatory payments prescribed by the laws of the Republic of Lithuania and Government Resolutions, except for the value-added tax payable into the budget, interest on the State capital used, also amounts paid as penalties, default interest and under other sanctions; 7) loan interest and payments related to the issuance of loan guarantees; 8) special reserves for the doubtful assets of banks and credit unions and technical insurance provisions formed by insurance companies (insurers), also the share of insurance contributions intended for reinsurance, with the exception of the technical provision for refunding insurance contributions; 9) additional inputs into the Ignalina Nuclear Power Plant prescribed by the decrees of the Government of the Republic of Lithuania, not provided hereunder; 10) amounts of value added tax paid on the purchase made, also paid amounts of value added on import, not subject to deduction under the provisions of the Law on the Value Added Tax; 11) repair costs of fixed assets owned or held under a leasing agreement, provided the costs over the taxable period do not exceed 50% of the asset acquisition value. If the repair costs exceed 50 % of acquisition value of the fixed assets owned or held under a leasing agreement, or where reconstruction works of said assets are carried out, the asset acquisition value shall be increased by the total value of repairs and reconstruction work. The works regarded as reconstruction shall be specified in accordance with the Law on Construction. The repair, reconstruction and maintenance costs of immovable property leased or conveyed gratuitously under a loan for use agreement by municipalities, public authorities and state-owned (municipal) enterprises, incurred by the borrower shall be eliminated from the gross income as prescribed in the cases and according to the procedure established by the Government of the Republic of Lithuania or the body authorised by it. Likewise, the incurred repair costs (not exceeding 50% of the property acquisition value) and maintenance costs of property leased from other persons under a lease (loan for use) agreement shall be eliminated from the gross income as prescribed in the cases and according to the procedure established by the Government of the Republic of Lithuania or the body authorised by it; 12) the sum total of natural loss of limited amount as prescribed by the Government of the Republic of Lithuania or the body authorised by it and travelling expenses as well as the enterprise’s representation expenses, which expenses, however, must not exceed 1% of the enterprise’s sales revenue. As used in this Law, the term “representation expenses” means the funds of the enterprise allotted for the creation of new and development of the existing business links with other legal or natural persons, with the exception of the enterprise employees. The representation expenses shall be incurred for the benefit of specific persons. The representation expenses shall be recognised to qualify for being eliminated from the gross income according to the procedure established by the Government of the Republic of Lithuania or the body authorised by it; 13) contributions paid for the benefit of enterprise employees under the Law of the Republic of Lithuania on Pension Funds into the personal accounts of pension scheme members, but not in excess of 25% of the employee’s income from labour relations calculated for the employees during the taxable year; 14) the sum total of admission and membership fees not in excess of 0.2% of the sales revenue and the sum total of the member’s special purpose contributions not in excess of 0.2% of the sales revenue, where the fees and contributions are paid to legal persons the activities whereof are regulated by special laws and which are not profit-oriented, whereas profit generated by which may not be apportioned to their founders and/or stakeholders and/or members; 15) the sum total of bad debts incurred during the taxable period, provided that the amount had been included in the sales revenue of the enterprise (the taxpayer) before the taxable period; however, in case the amount of bad debt was included in the sales revenue of the enterprise (the taxpayer) prior to 31 December 1999, the amount of bad debts shall be carried over in equal portions throughout the five-year period to the enterprise’s costs deductible from the taxable profit, starting from the taxable period when the provisions of the subparagraph became effective. Debts shall be treated as bad debts if the enterprise (the taxpayer) is not in the position to recover the debts after the expiry of at least one year from the inclusion of the debt in the enterprise’s (tax payer’
5. s)sales revenue, or if the debtor is diseased or has been officially declared dead, or has been liquidated or adjudicated bankrupt, and in all the cases referred to above the enterprise (tax payer) proves that the debt is to be classified as a bad debt and that effort has been put in to recover the debts. The provisions of this subparagraph shall not apply to banks or in respect to mutual bad debts of members of groups of associated undertakings. The definition of the term “group of associated undertakings” is given in the Law on Competition of the Republic of Lithuania. The procedure for proving that the debts are to be classified as bad debts and efforts for the recovery thereof have been made as well as the method of calculating the amounts of bad debts shall be established by the Government of the Republic of Lithuania or the body authorised by it. Article 6. The actual expenses for charity and sponsorship, confirmed by legally valid documents shall be eliminated from the legal persons’ total taxable profit computed according to the procedure established in Article 4 of this Law, provided that the persons are entitled to give charity under the Law on Charity and Sponsorship of the Republic of Lithuania. For charity donors and sponsors provided for under the Law on Charity and Sponsorship of the Republic of Lithuania, who are not specified in paragraph 1 hereof, the actual expenses for charity and sponsorship, confirmed by legally valid documents, shall be twice deducted from the taxable profit computed in the manner established in Article 4 of this Law; the deducted amount, however, must not exceed 40% of the total taxable profit. Where fixed assets are given as charity and sponsorship, the total value of charity and sponsorship shall amount to the residual value of the assets. Where other valuables are donated for charity and sponsorship, the total value of the given charity and sponsorship shall amount to the acquisition costs (production costs) of the valuables. Where charity and sponsorship is given by providing services, the value of charity and sponsorship shall amount to the costs of the services. Where sponsorship is given by conveying tangible long-term assets under a loan-for use agreement, the value of sponsorship shall be calculated as the total assets depreciation costs during the period of the use thereof by the recipient of sponsorship. The share of profit of free economic zone enterprises and zone management companies used for the acquisition of fixed assets, for scientific research and introduction of new technologies as well as for investment in the zone shall not be subject to taxation. 3. Tax Rates Article 7. Tax rates: 1) taxable profit of legal persons and head offices shall be taxed at 24%; 2) taxable profit of legal persons used for investment shall be taxed at zero (0%) rate, provided they choose the investment computation method specified in Article 21, paragraph 1, subparagraph 1; 3) income received by foreign state enterprises (except for the foreign state enterprises specified in subparagraph 4 hereof) from the legal persons of the Republic of Lithuania and income received by the permanent establishments of foreign state enterprises in the Republic of Lithuania (except for the cases when payments are made to foreign state enterprises by their permanent establishments), without any deduction of costs, unless this Law establishes otherwise, for services provided in the spheres of marketing, consulting, agency, design-construction, labour organisation, management, co-ordination, for the lease of property, for the sale or other disposition of immovable property which is subject to registration in the Register of Immovable Property; also interest, except for interest on loans extended by foreign banks and international financial institutions (institutions or organisations all members or founders whereof are governments of several states, also funds of foreign states, state financial institutions, in which over 50% of shares are held by foreign state governments) as well as interest on the debentures issued by the economic entities of the Republic of Lithuania and securities issued by the Government, local governments of the Republic of Lithuania and international financial organisations whose member is the Republic of Lithuania shall be taxed at source at the rate of 15%; . are paid for the provided marketing, consulting and intermediary services, also interest on loans, except for interest on loans granted by foreign banks and, according to the list compiled and approved by the Government of the Republic of Lithuania or the competent authority, by international financial institutions, shall be taxed at source by applying the 15% tax rate; royalties; fees for the copyright and related rights transferred or granted under the copyright licensing agreement, also for the rights to use patent for invention rights, industrial design, semiconductor topography, trade and service mark, name of the firm, secret formula or method, franchise, payment of damages for the infringement of copyright or related rights or compensation for the infringement of copyright or related rights shall be taxed at the rate of 10%; 4) income of foreign enterprises registered in the tax haven states or zones, which is received from the legal persons of the Republic of Lithuania and permanent establishments of foreign state enterprises in the Republic of Lithuania (except in cases when payments are made to foreign state enterprises from their permanent establishments) shall be taxed at source at the rate of 15%. 4. Tax Concessions Article 8. The rate of profit tax for legal persons producing agricultural products and for specialised enterprises providing services for agriculture shall be 10% of the taxable profit. If the portion of income from agricultural products and services provided for agriculture is less than 50% of sales revenue, all profit shall be subject to taxation at the rate established in Article 7 of this Law. The taxable profit of agricultural companies (co-operative societies) which process and sell agricultural products purchased exclusively from their members and provide services in the sphere of agriculture exclusively to their members-natural persons shall be taxed at 0 rate. The tax rate for creative unions (unions of architects, artists, designers, photographers, composers, film makers, scientists, writers, folk artists, theatre actors and directors, and journalists) as well as their companies and organisations which allocate at least 29 % of their profit for financing the needs of creative unions, shall be 5% of the taxable profit. Free economic zone enterprises shall pay profit tax at an 80% lower rate for 5 years from the enterprise registration day, while for the subsequent 5- year period the rate shall amount to 50% of the regular profit tax rate. If a foreign investor (investors) acquires at least 30% of the zone enterprise's authorised (ownership) capital and invests at least USD 1 million worth of capital of foreign origin, the enterprise shall be exempt from taxes on profits for a 5-year period from its registration day and for the subsequent 10 years the rate of tax levied on the enterprise's profits shall be reduced by 50 %. If an enterprise was set up (registered) or foreign capital was invested prior to 31 December 1993, the rate of profit tax applicable to the share of its profit (proportionate to the share of foreign capital in the enterprise's authorised capital) due to the foreign investment and not used for the payment of wages, also not re-invested in the enterprise, shall for a 5-year period be reduced by 70%. If an enterprise was set up (registered) or foreign capital was invested in the period from 1 January 1994 to 1 August 1995, the rate of profit tax applicable to the share of profit due to the foreign investment shall for a 6-year period be reduced by 50%. An enterprise in which the investor's (investors') foreign capital investment amounts to USD 2 million shall be exempt from profit tax for a 3-year period starting from the beginning of the accounting quarter the enterprise became profit-making. During the subsequent 3 years the rate of profit tax applicable to the enterprise shall be reduced by 50%. Tax concessions prescribed by this paragraph shall not apply to enterprises engaged in wholesale and retail trade in oil products if their income from trade in these products accounts for over 30% of their sales revenue. Taxable profit of legal persons whose gross income over the taxable period is not in excess of LTL 1 million and the average number of workers on the payroll is 50 or less, shall be taxed at 15%. The tax concession shall not apply to legal persons who are engaged in trade in alcoholic beverages or tobacco products, wholesale or retail trade in oil products (including cases where other products are also sold alongside), also those legal persons who offer public catering services and sell alcoholic beverages, including beer and tobacco products. Until 31 December 1997 credit unions shall be exempt from profit tax for the period of 2 years counting from the day of registration in the manner specified by this Law. Beginning from 1 January 1998, or, if a 2-year period had elapsed by that date, from the date of credit union registration, its profit shall be taxed at a 70% lower rate. A 5% rate shall be applicable to the profit of organisations (enterprises) which, according to the law regulating their setting up and activity, or pursuant to the Government Resolution are non-profit organisations. The profit of investment companies with variable capital and closed-end funds, governed by the Law on Investment Companies, received after investing or reinvesting in securities the accumulated funds, and/or received from trade in securities as well as securities revaluation results shall be tax-exempt. The services of health care institutions, financed from the Compulsory Health Insurance Fund shall be tax-exempt. [Paragraph 14 of Article 8 effective as from 1 January 2000.] Pension contributions received by pension funds into personal accounts of members of pension schemes as well as income from the investment of pension fund assets shall be exempt from tax. Article 9. Enterprises which receive over 50% of sales revenue for their own products and which employ handicapped workers shall be entitled to the following deductions in computing taxable profit: Proportion of Handicapped Deduction of Taxable Workers Profit Over 50% 100% 40-50% 75% 30-40% 50% 20-30% 25% The categories of individuals to whom the status of handicapped workers is applicable and the method of computing their proportion to the total number of workers, as well as regulations elaborating on the application of such tax concession shall be established by the Government of the Republic of Lithuania. Article 10. If a taxpayer under the laws of the Republic of Lithuania is entitled to several tax concessions, only the biggest tax concession shall be granted. The laws of the Republic of Lithuania may provide for the cases where taxpayers may be exempted from the unpaid taxes, as well as being released from the payment of penalties and interest due for the unpaid amounts. 5. Calculation and Payment of Tax Article 11. Legal persons of the Republic of Lithuania shall pay the calculated amount of profit tax into the budget prescribed by the Law on the Structure of the Budget. When income of foreign enterprises is taxed at source according to the procedure prescribed by this Law, the amount of the profit tax shall be withheld and paid by the legal person of the Republic of Lithuania or the permanent establishments responsible for the payout of income to the above enterprises, within 15 days after the close of the month the income was paid out. Upon receipt of income from the sale or other disposition of immovable property which is subject to registration in the Register of Immovable Property (hereinafter - property), a foreign state enterprise shall be entitled to apply to the local tax administrator in the territory of whose operation the person deducting the tax is registered, requesting recalculation of the deducted profit tax on the property which has been sold or otherwise disposed of. In this case profit tax shall be computed on the income received from the sale or other disposition of property less the expenses related to the acquisition or construction thereof. The application and documents accounting for the acquisition or construction of property shall be submitted for the recalculation of profit tax to the local tax administrator in the territory of whose operation the person deducting the tax is registered. Having examined the submitted documents and assessed whether or not the request is reasonable, the local tax administrator shall calculate the difference between the income received from the sale or other disposition of property and the expenses related to the acquisition or construction of the property, as well as computing a tax of 24% on the profit. Any overpayment of the tax shall be refunded as prescribed by the Law on Tax Administration. Article 12. The advance amount of the profit tax (hereinafter - the profit tax advance payment) payable by the taxpayer according to the submitted advance financial report shall be calculated in accordance with the procedure established in this Article. The profit tax advance payment shall be calculated by the taxpayer. For the first four months of the taxable period profit tax advance payment shall be calculated based on the profit tax amount actually estimated for the taxable period prior to the preceding taxable period. Profit tax advance payment for the fifth to twelfth months of the taxable period shall be calculated according to the amount of profit tax actually estimated for the preceding taxable period. Each month’s profit tax advance payment shall amount to 1/12 of the amount of profit tax actually calculated over the said period. For the first taxable year the registered new enterprises shall be exempt from profit tax advance payments. Said enterprises shall commence paying profit tax advance payments beginning from May (the fifth month of the taxable period) of the following year. If the preceding taxable period was shorter than 12 months, when calculating profit tax advance payments, the amount of tax estimated for the period, divided by the number of months in the period and multiplied by 12 shall be considered as the actually calculated amount of tax. If the gross income received over the preceding taxable year is not in excess of LTL 100 000, the enterprise shall not be required to make profit tax advance payments in the current taxable year. The taxpayer, who verifies that his gross income for the current year shows a reduction of 25% or more as compared with the gross income for the appropriate period of the preceding year or that the application of tax concessions prescribed by this Law are being initiated in respect of the taxpayer, shall have the right to apply to the local tax administrator, not later than a month before the regular payment of the profit tax advance, for the reduction of the remaining profit tax advance payments or exemption therefrom. The local tax administrator must reduce the taxpayer’s profit tax advance payment liability in proportion to the reduced income or must exempt it from the profit tax advance payment. If the taxpayer’s current year gross income again shows an increase of up to 25% or more, it must not later than a month before the payment day of the regular profit tax advance payment petition the local tax administrator to increase the amount of the remaining profit tax advance payments. The taxpayer may elect to pay the profit tax advance payment based on the amount of profit tax computed for each month of the current year. Article 13. Profit tax advance financial report for the first four months of the taxable period shall be submitted on or before the last day of the first month (January) of the taxable period. Profit tax advance financial report for the fifth to twelfth months of the taxable period shall be submitted on or before the last day of the fifth month (May) of the taxable period. If the taxpayer elects to pay profit tax advance payment in accordance with the profit tax amount estimated for each month of the current year, the profit tax advance financial report shall be submitted after the close of each month of the taxable period on or before the 15th day of the following month. Profit tax advance payment must be paid at the close of each month of the taxable period not later than by the 15th day of the following month. Article 14. At the close of the calendar year (taxable period), before May 1 of the following year (by the 1st day of the fifth month of the following taxable period) the taxpayers shall submit to the territorial state tax inspectorates the financial statement and profit tax report prescribed by the Law on the Principles of Accounting. The forms of the statement and profit tax advance report as well as the manner of their filling out shall be established by the central tax administrator. If the amount of profit tax calculated in the profit tax report exceeds the amount of tax paid under profit tax advance reports over the taxable period, the taxpayer must pay into the budget the underpaid amount of profit tax the next working day following the expiry of the time period prescribed for the submission of profit tax report. The overpaid amount of tax shall be refunded according to the procedure established by the Law on Tax Administration. 6. Responsibility for Correct Calculation of the Amount and Payment of Profit Tax Article 15. The taxpayer shall be responsible for correct calculation and payment of the profit tax advance payment and the profit tax due for the taxable period. If the taxpayer or the person withholding the tax fails to timely pay or transfer the profit tax advance payment (portion thereof) or the estimated profit tax, default interest shall be computed in accordance with the procedure established by the Law on Tax Administration. In case of any understatement by the taxpayer of the profit tax in the tax report or underpayment of tax into the budget, there shall be economic sanctions (penalties and default interest) imposed in the manner prescribed by the Law on Tax Administration. Article 16. The taxable entity shall be held responsible for paying the profit tax by the due date. Failure to timely pay the tax shall subject the taxable entity to liability for interest in the manner laid down by the Law on Tax Administration of the Republic of Lithuania. The Government of the Republic of Lithuania, taking into consideration the reasons due to which the taxpayer failed to make the required payments into the budget by the due date, may grant certain taxpayers postponement of payment into the budget of the computed interest. During the period of postponement, interest shall not be computed. Where the taxpayer fails to pay the amount of the computed interest by the last day of postponement, interest then shall also be computed and paid into the budget for the entire period of postponement. The period of postponement of payment shall be deemed to commence as from the day of coming into effect of the Government Resolution concerning the establishment of the period of postponement of payment of the computed interest. The period of postponement of payment shall apply to the amount of interest computed prior to the day of coming into effect of the Government Resolution concerning the establishment of the period of postponement of computed interest payment. Article 17. Officers of the taxable entity who furnish false information resulting in an erroneous assessment of the tax due shall be subject to liability in accordance with the procedure established by law. 7. Other Provisions Article 18. If the provisions of the interstate agreement to which the Republic of Lithuania is a party conflict with the Law on Taxes on Profits of Legal Persons, the provisions of the interstate agreement shall apply for imposing the tax on profits. Article 19. When a legal person of the Republic of Lithuania receives profit that is subject to taxation abroad, and there is no agreement allowing to avoid double taxation, it is possible to deduct, according to the procedure laid down by the Government or, on its authorisation, by the Ministry of Finance, from the legal person's estimated profit tax amount an amount equal to the profit tax paid in the foreign state. The amount subject to deduction may not exceed the share of tax estimated in the Republic of Lithuania, that is payable on the income received in the foreign state. Article 20. Profit tax concessions established in 6, 7 and 8 paragraphs of Article 8 of this Law shall be applicable in cases where the enterprise was set up (registered) or foreign capital was invested, or foreign capital investment in the enterprise reached USD 2 million prior to 1 April 1997. Article 21. In this Law, investments shall be computed by applying only one of the following methods chosen by the enterprise: 1) the profit used for investment into one’s own enterprise shall be taxed at zero (0% rate). In this case the investment shall be computed according to the following procedure: there shall be deducted from the acquisition costs (including the costs of repairs which exceed 50% of the property acquisition costs, and the costs of reconstruction) of fixed assets in use (including construction in progress) and the costs of the licensed computer programmes in use (hereinafter - computer programmes), except for the costs of computer programmes created by the enterprise, that were at the end of the taxable period, the acquisition costs (including the costs of repairs which exceed 50% of the asset acquisition costs, and the costs of reconstruction) of fixed assets used (including construction in progress) and the costs of the licensed computer programmes used, except for the costs of computer programmes created by the enterprise, that was at the beginning of the taxable period, also the balance of the borrowed funds used during the taxable period for the acquisition of fixed assets and computer programmes, except for the programmes created by the enterprise, and not repaid, as well as the amount of liability to creditors incurred over the taxable period in relation to the acquisition of fixed assets and computer programmes, except for those created by the enterprise, the costs of fixed assets or computer programmes gratuitously received by the enterprise over the taxable period and the assessed depreciation costs of the fixed assets and computer programmes, except for those created by the enterprise, acquired over the taxable period. In case of sale of the fixed assets or computer programmes, except for those created by the enterprise, the total amount of sales revenue received shall be taxed without deducting the residual value of the assets. In case the fixed assets or computer programmes, except for those created by the enterprise, are conveyed under a loan for use contract or invested in another enterprise, the non-operating taxable income shall be increased by the asset acquisition costs. When computing the profit taxable under this Law, which has been used for investment, debts to other banks and other credit institutions as well as term deposits shall be considered as funds borrowed from banks and other credit institutions; 2) investment into one’s own enterprise shall mean the acquisition of computer programmes and of fixed assets, also construction or repairs of the fixed assets where the costs of repairs exceed 50% of the asset acquisition costs, also the reconstruction thereof or construction in progress, financed with the enterprise’s equity or borrowed funds. Purchase of cars shall not be considered as an investment, except in enterprises, whose principal business is provision of transportation services. Creation of computer programmes shall not be considered as acquisition of computer programmes. When computing the total taxable profit, the invested funds shall be deducted from the gross income only by applying one of the following methods: upon the acquisition or construction of fixed assets or upon acquisition of computer programmes, the total acquisition costs (when the assets are acquired by leasing - the actually paid up portion of the assets) or the costs of acquisition, construction of fixed assets or the costs of acquisition of computer programmes shall be carried over to expenses in portions within the period of use of the assets in the manner prescribed by Article 5, paragraph