REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA REPUBLIC OF LITHUANIA LAW ON SMALL ENTERPRISES Article

1. Objectives of the Law This law shall establish the basic principles of stimulating the activities of small enterprises. Small enterprises shall function in pursuance of all the laws regulating the activities of enterprises, with the exception of specific requirements provided for in this Law. This law shall not apply to state enterprises and state stock companies, as well as to the activities specified in the list approved by the Government of the Republic of Lithuania which are not liable to be stimulated. Article
2. Definition of Small Enterprise A small enterprise shall be an enterprise with the total number of employees not in excess of
3. Article
4. Tax Reliefs For the period of two years from the entry into force of this Law or from the founding of a new enterprise, the rate of tax on profits imposed on small enterprises with rights of legal persons as prescribed by the Law on Taxes on Profits of Legal Persons, and the rate of income tax imposed on small enterprises with rights of natural persons as prescribed by the Provisional Law on Income Tax of Natural Persons shall be reduced by 70 percent, and, beginning with the third year, by 50 percent, provided the total number of employees in said enterprises is not in excess of 50, and the income received from productive activity amounts to not less than two-thirds of all income generated from the sale of goods and services. For small enterprises whose income received from productive activity amounts to less than two-thirds of all income generated from the sale of goods and services, said tax rates shall be reduced by 50 percent. In accordance with the norms specified herein, income tax of natural persons shall be levied on the portion of profits of operating small enterprises which is allocated for the payment of bonuses or other incentives; upon computing taxable profit, said amounts shall be deducted from balance profit. Upon computing taxable profit or taxable income, all expenditures and investments related to scientific research, design and construction work, and introduction of new technology shall be deducted from gross income. Article
5. Tax Credit The payment of taxes on profits (income) prescribed by law, for small enterprises with the number of employees from 51 to 100 whose income from productive activity amounts to not less than two-thirds of all income generated from the sale of goods and services, shall be deferred (tax credit shall be given) for not longer than three years. For other small enterprises with the number of employees specified above, the payment of taxes on profits (income) shall be deferred for one year. An enterprise which has repaid not less than 50 percent of the given tax credit shall be entitled to a tax credit in the ensuing period. Article
6. Privileges for the Crediting Party Enterprises and banks of all types of ownership which give credit to small enterprises on easy terms, are entitled to a 30 percent reduction of the rate of tax on profits (income) equal to the amount of the credit given. Article
7. A simplified procedure of accounting of and accountability for the results of their productive activity shall be applied to small enterprises. The procedure shall be established by the Ministry of Finance of the Republic of Lithuania. Vytautas Landsbergis President Supreme Council Republic of Lithuania Vilnius 20 December 1992 No. I-2125