Translation from Lithuanian Translation from Lithuanian Government of the Republic of Lithuania R E S O L U T I O N No. 888 On Types of Taxable Income Received by Foreign State Enterprises Registered in the Countries or Zones of a Favourable Tax Rate from Legal Persons or Enterprises of the Republic of Lithuania which have no Rights of a Legal Person Vilnius, 4 August 1997 Following Article 41 of the Supplement to the Republic of Lithuania Law on Taxes on Profits of Legal Persons and the Law on the Amendment of Articles 2, 3, 4, 5, 7, 11 (Records, 1997, No. 61-1442), as well as Article 261 of the Supplement to the Republic of Lithuania Provisional Law on Income Tax of Natural Persons and the Law on the Amendment of Articles 1, 24, 27, 30 (Records, 1997, No. 61-1443), the Government of the Republic of Lithuania r e s o l v e s:
- To approve types of taxable income received by foreign state enterprises registered in the states or zones of a favourable tax rate (attached) from legal persons and enterprises of the Republic of Lithuania which have no rights of a legal person.
- To establish a list (according to the annex attached) of states (zones) in which either no taxes or tax rates lower than those in the Republic of Lithuania are imposed. Prime Minister Gediminas Vagnorius Minister of National Economy acting as Minister of Finance Vincas Babilius Approved by Resolution No. 888 of 4 August 1997 of the Government of the Republic of Lithuania Types of Taxable Income Received by Foreign State Enterprises Registered in the Countries or Zones of Favourable Tax Rates from Legal Persons or Enterprises of the Republic of Lithuania which have no Rights of a Legal Person General Provisions
- Paragraph 4 of Part 1 of Article 7 (29 per cent rate) of the Republic of Lithuania Law on Taxes on Profits of Legal Persons and Part 9 of Article 24 (24 per cent rates) of the Republic of Lithuania Provisional Law on Income Tax of Natural Persons are applied as of 1 July 1997 to the taxable income indicated in the present legal act which, after the present Resolution comes into force, are received by the enterprises registered (established, located) in the states and zones of a favourable tax rate and their branches registered in the states or zones of a favourable tax rate and other states (hereinafter referred to as branches) from a legal person or enterprises which have no rights of a legal person of the Republic of Lithuania (hereinafter referred to as economic entities of the Republic of Lithuania).
- Taxable income of economic entities of foreign states registered (established, located) in the states or zones of a favourable tax rate and their branches shall be formed of all the amounts paid by economic entities of the Republic of Lithuania (irrespective of the form of payment) for all kinds of services, work done and commodities, as well as interest, insurance contributions and guarantees paid, unless otherwise is stated by the present legal act. An economic entity of the Republic of Lithuania, in paying these sums to a foreign economic entity located in the state or zone of a favourable tax rate or its branches, must withhold from them the tax rate of 29 per cent (24 per cent).
- In the event that the economic entity of the Republic of Lithuania shall settle accounts for services, work done and commodities indicated under Paragraph 2 with a foreign economic entity registered (established, located) in the state or zone of a favourable tax rate or its branch through third persons (by order, per procurationem or any other agreement), the economic entity of the Republic of Lithuania shall withhold the tax at the rate of 29 per cent (24 per cent) from these amounts, unless otherwise is stated by the present legal act.
- In the event that the economic entity of a foreign state, registered (established, located) in the state or zone of a favourable tax rate or its branch, shall open an account in a credit institution registered in the Republic of Lithuania, and the said credit institution shall pay (transfer to the account of the economic entity of a foreign state) interest on the deposit in that account, the credit institution, in paying (transferring to the account) interest must withhold the tax at the rate of 29 per cent. In the event that an economic entity of the Republic of Lithuania shall transfer the amounts into the account of the economic entity of a foreign state registered (established, located) in the state or zone of a favourable tax rate or its branch, opened with the credit institution registered in the Republic of Lithuania, the tax is withheld from the amounts paid, unless otherwise is stated by the present legal act.
- In the event that the Lithuanian economic entity shall be indebted to a foreign enterprise registered (established, located) in the state or zone of a favourable tax rate or to its branch, which are indebted to the Lithuanian economic entity, after netting has been carried out, the amount of the debt covered of the Lithuanian economic entity is subject to taxation.
- The amounts, paid by the economic entity of the Republic of Lithuania by 1 September 1997 to the foreign economic entity registered (established, located) in the state or zone of a favourable tax rate or its branch, for products, assembly components and technological equipment shall be subject to the tax at the rate of 29 per cent (24 per cent).
- Paragraph 4 of Part 1 of Article 7 (29 per cent rate) of the Republic of Lithuania Law on Taxes on Profits of Legal Persons and Part 9 of Article 24 (24 per cent rate) of the Republic of Lithuania Provisional Law on Income Tax of Natural Persons shall not apply to the following types of incomes received by economic entities registered (established, located) in the state or zone of a favourable tax rate or their branches from economic entities of the Republic of Lithuania: 7.
- the amounts, which the economic entity of the Republic of Lithuania pays to a foreign economic entity registered (established, located) in the state or zone of a favourable tax rate for raw materials, which the economic entity of the Republic of Lithuania further processes or uses; 7.
- the amounts paid as of 1 September 1997, which the economic entity of the Republic of Lithuania shall pay to the foreign economic entity registered (established, located) in the state or zone of a favourable tax rate or its branch for products and assembly components which the economic entity of the Republic of Lithuania further processes and uses or assembles, as well as for technological equipment in the event that the indicated product, assembly components and technological equipment shall be purchased at prices that do not exceed the established control prices. The amounts paid, which exceed the control prices of products, assembly components and technological equipment are subject to the tax at the rate of 29 per cent (24 per cent). The list of products, assembly parts and technological equipment, as well as their control prices are established by the Ministry of National Economy after they have been coordinated with the Ministry of Finance; 7.
- dividends which the economic entity of the Republic of Lithuania shall pay to the foreign economic entity registered (established, located) in the state or zone of a favourable tax rate; 7.
- the amounts paid by Lithuanian institutions of sea and air transport providing these amounts shall be related to charges and dues of sea ports or airports, maintenance of vessels and aircraft or their necessary repairs, taking on fuel, insurance, ship chartering, communication services, legal services, when these Lithuania enterprises, in carrying out international transportation make use of sea ports or airports of the states or zones in which either no taxes or tax rates lower than those in the Republic of Lithuania are imposed.
- The economic entity of the Republic of Lithuania shall render the account of the amounts paid to foreign state enterprises registered (established, located) in the state or zones of a favourable tax rate or their branches or the taxes withheld from the said amounts to that tax administrator within whose territory of activity the economic entity is registered. The form of the account shall be confirmed by the Minister of Finance. The account shall be presented and the tax shall be paid not later than within 15 days after the end of the month in which the amounts to the foreign enterprises indicated were paid. _________________ Annex of Resolution No. 888 of 4 August 1997 of the Government of the Republic of Lithuania States(zones) in which either no taxes or tax rates lower than those in the Republic of Lithuania are imposed Andorra the Cook Islands Anguilla Kuwait Antigua and Barbuda Lebanon Aomen (Macao) Liberia the Azores Madeira the Bahamas Islands the Maldives Bahrain Malta Barbados the Marshall Islands Belize the Isle of Man the Bermudas Monaco the British Virginia Islands Monserrat Brunei New Caledonia Dominica Nauru Jersey the Dutch Antilles Djibouti Panama Ecuador San Marino Guernsey the Seychelles Gibraltar St. Pierre and Miquelon Grenada St. Christopher and Nevis Guatemala St. Vincent and Grenadines Hong Kong Singapore Jamaica Saint Helena Jordan Tahiti the United Arab Emirates the Turks and Caicos Islands the Caiman Islands Tonga Kenya Uruguay Cyprus Vanuatu Costa Rica Venezuela _________________