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REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA REPUBLIC OF LITHUANIA LAW ON VALUE-ADDED TAX I. The Object of Tax Article

  1. The object of value-added tax (hereinafter referred to as VAT) shall be the value added to the product and services at each stage of production, distribution and sales, as well as imported goods. Article
  2. A good, as the object of tax, shall include things, coins meant for numismatics, real property (with the exception of land), and energy of all types. Article
  3. Services, as the object of the tax, shall include services of all types and other activities provided for a consideration of money, excluding those provided by the employees to their employers under employment contract. Article
  4. The following goods and services shall be exempt from VAT: 1) medical and dental services, medicines, medical goods and medical equipment; 2) social services rendered by day care centers and homes for invalids and the elderly; 3) educational, scientific and cultural services rendered by institutions of education, science and studies, as well as non- profit cultural institutions; 4) services of route passenger transport; 5) postal services (with the exception of transmission of parcels and telecommunication services, as well as postal stamps and envelopes meant for collecting); 6) insurance and banking services (excluding storage facility services) and turnover of securities; 7) coffins, wreaths, temporary tombstones, and funeral services; 8) publishing, printing and circulation of newspapers, magazines and books; 9) services and works for which taxes are paid into the budget; 10) goods and services rendered to foreign diplomatic and consular missions and international organisations; 11) state-owned property subject to privatization; 12) works and services paid for with donated funds; 13) rent for houses and apartments being leased for more than 2 months; 14) land rent; and 15) articles of traditional art. II. Payers of VAT Article
  5. VAT shall be calculated and paid into the budget by: legal persons, enterprises without the rights of a legal person, sub-units of foreign economic entities operating in the Republic of Lithuania, and natural persons. Article
  6. Persons whose receipt from the sale of goods and services (not including the sale of long-term assets which were used for more than one year) are, excluding VAT, not in excess of 5,000 litas, shall not calculate and pay VAT into the budget. VAT paid by these persons for acquired goods or obtained services shall not be repaid. Persons whose income is specified in part 1 of this Article shall, if said income is between 5,000 and 15,000 litas per year, be entitled, if they wish, to be payers of this tax. If the annual receipts of these persons from the sale of goods and services are in excess of 15,000 litas, they shall be required to calculate and pay VAT into the budget according to the general procedure, starting from the month when the receipts exceeded the designated amount. Article
  7. Persons who under the provisions of Article 6 are payers of VAT must register with the State Tax Inspectorate as payers of VAT. Newly established companies, institutions and organisations which expect that their sales proceeds shall exceed the sum specified in Article 6, must register with the State Tax Inspectorate at least 10 days prior to the commencement of the activities. Article
  8. Persons who are not payers of VAT shall not have the right to charge this tax to their customers. If said persons do charge this tax, they must transfer it into the budget. III. Taxable Value and Time for Computation Article
  9. The taxable value of goods and services shall consist of: 1) the production cost of goods and the rendering price of services; 2) expenses for packaging, transportation, insurance and the like; 3) payments for the installation of equipment; 4) payments for mediation, commission and auction charges; 5) various discounts and additional charges not entered in the invoice; 6) expenses for the purchase or sale of goods on credit; 7) various taxes related with the sale of goods (customs duties, excise duties), excluding VAT; and 8) service expenses or other sums not included in the production cost of goods or rendering of services, which the customer pays to the seller of goods or services. Article
  10. The taxable price of goods imported into the Republic of Lithuania shall be determined according to the same procedure as for assessing customs duty (customs duty shall also be included therein). Article
  11. While exchanging goods (or services) the taxable price shall be the price of exchanged goods or services. Article
  12. VAT on goods and services shall be computed: when the seller (supplier of services) issues an invoice or other document to the customer for the goods sold (services rendered); upon paying the money at the cash desk, when goods (or services) are paid for in cash and an invoice is not issued; upon presenting the goods declaration when said goods are imported. IV. Tax Rates Article
  13. VAT shall be charged at a rate of: 1) 0% - for exported goods and services; or 2) 18% - for all goods and services with the exception of those referred to in Articles 4 and 38 of this Law and in item 1 hereof. Article
  14. VAT shall be computed by applying an 18% tax rate when charging it on the taxable value of goods sold or imported (or services rendered), or a 15.25% tax rate when charging it on the value of goods and services including VAT. V. Computation of the Tax Article
  15. Upon expiration of the tax period, the payers of VAT must transfer into the budget the difference between the computed sum of VAT for goods sold and services rendered and the deductible sum of VAT. Article
  16. The deductible sum of VAT shall include the sum of VAT recorded in in the accounts for goods delivered by the suppliers and services rendered and the sum of VAT paid for imported goods, with the exception of cases specified in Article 19 of this Law. Article
  17. If during the tax period the deductible sum of VAT was in excess of the computed sum of VAT for goods sold or services rendered, the difference shall be deducted from the computed sum of VAT for goods sold and services rendered in later tax periods. The sum of Vat recorded in in the accounts for acquired long-term assets meant for production shall be deducted from the sum of VAT assessed by the owner for goods sold and services rendered in that tax period in which these assets were used for the production of goods subject to VAT or exportable goods or for rendering services subject to VAT, taking into account the provisions of Article 20, irrespective of the sum of VAT levied on the goods sold. If the purpose of long-term property for production is later changed and therefore the right to deduct VAT is terminated, the deductible sum of VAT shall be adjusted according to the procedure established by the Government of the Republic of Lithuania, although no more than 10 years must elapse from the deduction of VAT from real property, and 5 years from other long-term property. The sum of VAT recorded in in the accounts for exported goods shall be deducted while computing VAT for that tax period during which these goods were exported, irrespective of the sum that was computed for the goods sold or services rendered. Article
  18. It shall be permitted to deduct sums of VAT which must be paid by other taxpayers only if such sums are indicated separately in the invoice. Sums of VAT paid for imported goods may be deducted only if there is a special mark of the customs office in the import documentation evidencing the payment of tax. The payer of VAT may calculate and deduct the tax according to the procedure established by the Government of the Republic of Lithuania for goods acquired in retail trade enterprises, but not in excess of 2,000 litas per year. Upon selling purchased second-hand items, special shops may, according to the procedure established by the Government of the Republic of Lithuania, calculate and deduct VAT according to the price of the purchased items. Article
  19. VAT recorded in the accounts for goods and services shall not be deducted from the sum of VAT due for the goods sold and services rendered, if such goods or services have been used: 1) for production of goods or rendering of services which are not subject to VAT (specified in Articles 4 and 38 of this Law); 2) for catering of the employees of the taxpayer; 3) for payment in kind for work done by the employees of the taxpayer; 4) for the maintenance of day care centers, rehabilitation centres, accommodations, holiday homes, or summer camps used for the needs of the employees of the taxpayer; 5) for gifts, representation, and various entertainment; 6) for the exploitation of passenger vehicles with a seating capacity not exceeding 10 passengers excluding the driver, provided that said exploitation is not related with the carriage of passengers for a fee and is not chargeable with VAT. Article
  20. If the taxpayer produces both taxable and non- taxable (VAT) goods (renders services), recorded in the accounts sum of VAT payable to suppliers during the tax period for goods and services (except those specified in Article 19) shall be deducted in proportion to the value of taxable and non-taxable goods (the value of the supplied services) delivered to the purchasers within that period. The Government of the Republic of Lithuania may establish a different procedure for deducting VAT in cases provided for in this Article. Article
  21. Paid VAT shall be repaid to: 1) foreign nationals who have acquired more goods at special shops than are permitted by the Government of the Republic of Lithuania to bring into the Republic of Lithuania duty free and who took them out of the Republic of Lithuania; 2) officers of foreign diplomatic and consular missions and members of their families (on a parity basis) as well as officers of international organisations and members of their families for goods acquired for personal consumption, or for services obtained. VI. Taxation of Imports and Exports Article
  22. VAT shall be levied on imports at the rate established in item 2 of Article 13, which shall be paid into the budget according to the procedure established for the payment of customs duty. Article
  23. The following imported goods shall be exempt from VAT: 1) goods imported as charity or humanitarian relief; 2) goods paid for with the funds of foreign states, international organisations and foundations; 3) goods brought in by natural persons, if their number does not exceed the designated number of goods permitted by the Government of the Republic of Lithuania to be imported free of duty. Article
  24. The value of imported goods shall be assessed by taking into consideration the provisions of Article 10 of this Law and the Law on Customs Tariffs of the Republic of Lithuania. The Government of the Republic of Lithuania may postpone the payment of VAT for imported long-term production assets, with the exception of means of transportation. Article
  25. Zero-rating provided for in Article 13 of this Law shall apply to the following goods: 1) exported goods; 2) goods, works and services relative to the carriage, loading, unloading of exported goods, and the transit of foreign cargo through the Republic of Lithuania; 3) provision, completion, repair, exploitation and rent of aircraft and ships which carry goods and passengers on international routes; 4) goods brought into customs warehouses and shops which are located outside the customs territory of the Republic of Lithuania; 5) services performed by the taxpayers -- enterprises, institutions and organisations -- beyond the boundaries of the Republic of Lithuania. VII. Value- Added Tax Accounting Article
  26. Customers must be issued invoices of goods dispatched and services rendered to them. The invoice must contain mandatory requisites provided for in Article 10 of the Law on the Principles of Accounting and the code of the payer. Article
  27. If after the issue of an invoice the prices of goods or their amount have been changed, a new invoice must be issued. Article
  28. If the issued invoices do not comply with the requirements of Article 26 and 27 of this Law, sums of VAT payable to suppliers according to these invoices shall not be deducted when calculating the sum of VAT payable into the budget. Article
  29. If the payer has calculated and included VAT for goods and services in the invoice which pursuant to this Law are outside the scope of VAT, said payer must pay this VAT into the budget according to the established procedure. Article
  30. The payers of VAT must keep a separate record of purchase and sale of taxable goods and services, according to which VAT shall be assessed. VIII. Procedure for Payment of VAT into the Budget Article
  31. The tax period of VAT shall be a calendar month. The Government of the Republic of Lithuania may establish the period of and procedure for advance payment of VAT. Article
  32. Upon the expiration of the due date of payment, each taxpayer must, before the 15th day of the next month, file with the State Tax Inspectorate a declaration of the computed and deductible sum of VAT. Article
  33. If a taxpayer fails to file a declaration when due, the State Tax Inspectorate shall increase the sum of VAT due during that tax period by 1%, which shall be recovered into the budget. Article
  34. If a taxpayer fails to file a declaration within 5 days after the expiration of the due date, the State Tax Inspectorate shall, without suit, recover into the budget the sum of tax showed on the declaration for the previous month, increased temporarily by 10% until the declaration is filed. Article
  35. The computed sum of VAT must be paid into the budget within 10 days from the date prescribed by Article 32 of this Law for filing the declaration. Upon failure to pay VAT in due time, the unpaid tax shall bear interest at the rate of 0.5% for each day thereafter, including the day on which the tax was paid into the budget. The unpaid VAT shall be recovered for the current year and 5 preceding years. IX. Control of Tax and Economic Sanctions Article
  36. If during the examination it is determined that the taxpayer showed in the declaration an amount of tax less than the correct sum of VAT or has deducted too much of and therefore paid too little into the budget, said taxpayer must pay the assessed deficiency and the penalty in an amount equal to the deficiency into the budget within 5 days after the date of the determination of default. The State Tax Inspectorates shall recover sums of taxes and penalties from enterprises, institutions and organisations without suit and from natural persons in court. X. Final Provisions Article
  37. This Law shall come into effect on 1 May,
  38. Article
  39. Upon the consent of the taxpayers, the following goods and services shall, until January 1, 1995, not be charged with VAT:: 1) gas, water, electricity, thermal power, sewage and other public utilities supplied to residential houses; 2) home-produced food stuffs sold to the consumers and trade companies which were not subject to excise tax until the introduction of VAT. The Government of the Republic of Lithuania has therefore established a provisional procedure for trade companies for the calculation and payment of VAT which shall be valid until January 1,
  40. Upon the consent of VAT payers, organizations supplying services, and construction and design of residential houses, including the construction of engineering networks and territorial management, shall be exempt from VAT until January 1,
  41. Article
  42. The Government of the Republic of Lithuania shall, by 1 March 1994, establish: 1) lists of goods and services for which VAT shall not be calculated; 2) the procedure for the registration of the payers of VAT; 3) the procedure for adjustment of sums deductible for acquired long-term production assets if they are used for other purposes; 4) the procedure for deducting VAT for goods acquired from retail trade and second-hand goods purchased by special shops; 5) the procedure for repayment of VAT - for foreign nationals, for goods bought at special shops and exported from the Republic of Lithuania; for officers of foreign diplomatic and consular missions and their family members, for goods acquired for personal consumption and for services obtained; 6) the procedure for the transition from turnover tax to VAT. Article
  43. The Government of the Republic of Lithuania, on the basis of this Law, shall, by 1 March 1994, issue instructions for the calculation and payment of VAT. I promulgate this Law passed by the Seimas of the Republic of Lithuania. ALGIRDAS BRAZAUSKAS President of the Republic Vilnius 22 December 1993 No.I-345 (As amended 7 April 1994) ____________

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