PROVISIONAL LAW

(1)persons, including foreign nationals and stateless persons, deriving income through their employment relations in enterprises, institutions, and organisations established (registered) in the territory of the Republic of Lithuania and at enterprises, institutions and organisations of the Republic of Lithuania, established (registered) in foreign states; residents of the Republic of Lithuania deriving income through their employment in foreign enterprises, institutions and organisations; foreign nationals and stateless persons employed in the Republic of Lithuania and receiving income for that activity from foreign enterprises, institutions and organisations. The provisions of this paragraph shall not apply to foreign nationals and persons who are not permanent residents of the Republic of Lithuania, employed in foreign diplomatic missions and consular institutions and to persons employed in diplomatic missions and consular institutions of the Republic of Lithuania in foreign states, who are not citizens of the Republic of Lithuania and are not permanent residents of the Republic of Lithuania;

(2)persons, including foreign nationals and stateless persons deriving income from inhabitants as well as deriving income not connected with employment relations from enterprises, institutions and organisations established (registered) in the territory of the Republic of Lithuania, and enterprises, institutions and organisations of the Republic of Lithuania, established (registered) in foreign states, as well as deriving income from the residents of the Republic of Lithuania and commercial-economic activities in the Republic of Lithuania; residents of the Republic of Lithuania, including foreign nationals and stateless persons who are permanent residents of the Republic of Lithuania, deriving income not connected with employment relations from foreign enterprises, institutions and organisations, as well as income from foreign residents and commercial-economic activities in foreign states;

(3)individual (personal) enterprises without the rights of legal persons and partnerships (IV. Chapter of this law).

(4)foreign enterprises the activities whereof are regulated by laws of foreign countries and the domicile whereof is in a foreign country (in the manner prescribed by Chapter IV of this Law). Article 2 Income tax shall not be levied on:

(1)pensioners' pensions paid out from state social insurance funds and state and local government budgets;

(2)stipends and other benefits and payments paid from the stipend funds of students of educational institutions financed from the budget, also stipends paid from international organisations and foundations the list whereof shall be compiled by the Government of the Republic of Lithuania.. Also income tax shall not be levied on benefits of trade unions, societies, other public organisations and political parties, paid to their members from the funds raised from natural persons as membership fee. This provision shall not apply when levying tax on benefits, received by persons related with these public organisations and political parties through employment relations. The rules of accounting of funds raised from membership fees of natural persons belonging trade unions, societies, other public organisations and political parties shall be established by the Government of the Republic of Lithuania. Article 3 International double taxation shall be abolished based on double taxation treaties that are concluded and become effective. In cases where no double taxation treaties are concluded with foreign states international double taxation may be abolished according to the procedure laid down by the Government of the Republic of Lithuania or, on its authorisation, by the Ministry of Finance. II. Taxation of Income Derived from Sources Connected with Employment Relations Article 4 Income received at the principal place of employment, connected with the employment relations, as well as income derived from other activities provided for in the bylaws of an enterprise ( with the exception of income the taxation thereof shall be regulated by III and IV parts of this law) shall be taxed at the rate of 33 percent, after subtracting from it the tax-exempt minimum. Article 5 The tax-exempt minimum of income received at the principal place of employment, connected with employment relations shall be:

(1)for the disabled of Group 1 - 200 litas ;

(2)for the disabled of Group 2 - 175 litas;

(3)for the disabled of Group 3 - 130 litas;

(4)for persons with three and more children under 18 years of age -200 litas;

(5)for the mother or father in case of a single parent family with one child under 18 - 155 litas and with two or more children under 18 tax exempt minimum shall be increased by 45 litas for the second and each successive child;

(6)for employees of enterprises producing agricultural products, whose monthly income generated from activities not connected with production or processing of agricultural products does not exceed 20 percent of their gross monthly income - 150 litas;

(7)for other persons not indicated in Par. 1-6 of this Article tax-exempt minimum (TEM) - 115 litas. In addition, for visually handicapped persons of Group 1 and 2, parents with at least one handicapped child, as well as for parents with 4 and more children, for the 4th and each successive child the computed tax shall be further reduced by 10 litas. The Government of the Republic of Lithuania shall index the tax-exempt minimum amounts specified in this Article according to the consumer price index. Article 6 The following monthly earnings in cash and in kind received at the principal place of employment shall be included in taxable income:

(1)wages, including various additional payments, sickness, maternity (paternity) benefits paid form social insurance funds - the sums computed for that month. Sums of wages paid by enterprises, institutions and organisations for work of more than one month in duration and whose duration has been recorded provided the full monthly wage or a portion thereof has not been paid during that period, shall be phased in proportion to the number of months worked (but not for a period in excess of 12 months);

(2)lump-sum bonuses, taxable benefits and other payments - the sums paid out within a month;

(3)bonuses and other incentive payments for work done within the period exceeding one month shall be phased proportionately to the number of recorded months (but not exceeding 12 months) and shall be subject to taxation at income tax rates provided in Supplement 2 of this law, which were valid in the month when these payments were calculated for being paid. Additional payment (honorariums) shall also be taxed in the same manner. Provided several such bonuses or other incentive payments are paid within a month, the tax shall be imposed on each of them;

(4)the sums of compensations and severance pay in the amount specified by the Law on Employment Contract that are paid to the employee upon discharge from work, also the sums of the awarded damages for forced absence from work by reason of unlawful dismissal shall be divided into separate parts the number whereof corresponds the number of average monthly wages which make up the corresponding sum of payments and each of them shall be taxed separately by applying income tax rates specified in Supplement 2 of this law. When calculating the amount of income tax payable for compensations for the unused holidays, the amount of compensation for each year's unused holidays shall be taxed separately (if the employee is entitled to several months of holidays, the amount of compensation due for each month shall be taxed separately) by applying the income tax rates specified in Supplement 2. Article 7 The following shall not be included in taxable income:

(1)social security and social assistance benefits paid from the state and social insurance funds, except for sickness and maternity (paternity) allowances;

(2)benefits paid by the employers in the event of death of the employee's spouse or other lawful heir apparent, also benefits in case of natural calamity or fire;

(3)amounts of compensation awarded by the court for material and moral damage;

(4)insurance contributions prescribed by Article 58 of the Law on Insurance of the Republic of Lithuania;

(5)business trip expenses in the amount specified by law or the Government of the Republic of Lithuania, also compensation of other work-related expenses and default interest for payments connected with labour relations;

(6)prizes (gifts) received on the occasion of personal celebrations or competitions or on any other occasion provided that the value of these gifts and prizes during the calendar year does not exceed the tax-exempt minimum. Taxable income shall be reduced by the amount expended on charity and sponsorship according to the procedure established by the Republic of Lithuania Law on Charity and Sponsorship. Article 8 The income earned at extra jobs specified in Article 6 of this law shall be subject to taxation pursuant to Article 6 at the rates provided in Supplement

1. If a person is employed at several jobs, taxes shall be withheld at the job which the employee chooses as his principal place of employment and indicates it in the employment contract or in a separate application submitted to the principal place of employment. Payments made to students of educational institutions for work done during practical training or for collective assistance, payments made to patients of medical and labour preventoria, inmates of boarding homes shall be taxed according to the procedure provided for in Articles 4 and 6 of this law. Article 81 Income, connected with employment relations, derived by persons who reside and are employed in the Republic of Lithuania, from foreign enterprises, institutions and organisations, as well as income derived from foreign residents and from commercial-economic activities or other activities in foreign states shall be taxed in the manner prescribed by V. Chapter of this Law. Article 9 Income tax at the rates specified in Article 4 and 8 of this law shall be withheld by those enterprises, institutions and organisations which assessed and paid it, as well as by individual employers who pay wages to persons hired by them. Article 10 Enterprises, institutions, organisations and individual employers, upon the receipt of money from banking institutions for paying wages for the appropriate month (or the second half of a month), shall simultaneously file a payment order to such banking institutions for paying sums of income tax withheld from that month's wages. In calculating payments specified in paragraph 3 of Article 6, the tax withheld from them must be transferred to the budget upon receiving money for said payments from banking institutions. It is prohibited to pay income tax from the financial resources of an organisation. Organisations and individual employers having no settlement accounts with the banking institution, or who pay wages from their current receipts, shall file payment orders to banking institutions for the payment of withheld income taxes not later than the day after the wage was paid out. Article 11 Enterprises, institutions and organisations possessing subsidiaries located on the territory of other municipalities shall transfer income taxes withheld from incomes of employees of those subsidiaries to the budget of that municipality on the territory of which such subsidiaries are located. The taxes shall be transferred in this manner only in cases where more than 20 persons are employed in these subsidiaries. Article 12 The overpaid amount of income tax shall be refunded in the manner laid down by the Law on Tax Administration of the Republic of Lithuania. Article 13 If the sum of income tax is not withheld or if the smaller amount is withheld than that due, said sums plus a penalty shall be collected from such enterprise, institution or organisation in the manner laid down by the Law on Tax Administration of the Republic of Lithuania. Institutions and organisations which are financed out of the budget shall not pay penalties for withholding smaller amounts of taxes than those due. An enterprise, institution or organisation may recover from its employee the due sum of income tax not withheld for the period not exceeding three preceding months, calculating from the month when the error was discovered. If an employee indicates more than one job as his principal job, the principal job shall be considered the one in which the smallest wage is received, and from it the sum due to be withheld and the penalty in the amount of 300 percent of this sum shall be recovered for the entire period. Article 14 If the sums of tax withheld are not transferred into the budget when due, default interest shall be charged in the manner laid down by the Law on Tax Administration of the Republic of Lithuania. Article 15 Income of clergymen, religious ceremony attendants and service staff (excluding persons who perform construction and restoration work) of religious communities, associations and centres (higher church authorities) received from the believers shall not be subject to income tax of natural persons. III.Taxation Procedure of Royalties Paid to Authors and their Descendants for Works of Science, Literature, Art and Other Author's Works Article 16 The royalty paid to authors and their lineal descendants for works of science, literature, art, discoveries and inventions as well as for other author's works is subject to taxation at the rate of 13 percent. The authors of discoveries and inventions possessing author's certificate are entitled to a tax-exempt minimal royalty in the amount of 8 TEMs for each discovery or invention. Taxable income shall be reduced by the amounts donated to the charity and sponsorship beneficiary in the manner specified in the Law on Charity and Sponsorship of the Republic of Lithuania. Article 17 Income tax on the sums of royalties shall be computed and withheld directly at the place of payment and shall be transferred to the budget according to the procedure provided for in Article 10 of this law. Article 18 The royalty paid to the author's descendants for works for which such royalty had been paid already, is subject to an income tax rate of 60 percent. Children under 18, spouses and parents (women over 55 and men over 60 as well as disabled persons of Group 1 and 2 irrespective of their age) are eligible for the 50 percent reduction of income tax computed under this Article. Article 19 Erroneously determined income tax on a royalty paid for works of science, literature and art may be revised and recovered in the manner laid down by the Law on Tax Administration of the the Republic of Lithuania. Article 20 The sum of income tax not withheld or the smaller amount withheld than that due, plus a penalty shall be collected from the enterprise, institution or organisation which has paid such a royalty, in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. Article 21 The withheld amount of income tax, exceeding the amount due, shall be refunded in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. Article 22 If sums of taxes withheld are not transferred to the budget when due, default interest shall be charged in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. Article 23 Municipal Councils shall have the right to reduce income tax for certain taxpayers or to exempt them from income tax by compensating same from the local budget. IV . Taxation Procedure of Income of Individual (Personal) Enterprises and Partnerships without the Rights of the Legal Person Article 24 Income tax shall not be imposed on the income of partnerships and individual (personal) enterprises without the rights of a legal person, producing agricultural products and rendering services to agriculture, the proceeds whereof from the sale of agricultural production and for services rendered account for more than 95 percent of the total sales proceeds. If the proceeds from the sold agricultural production and agricultural services account from 75 to 95 percent of the total sales proceeds, taxable income from the commercial economic activity registered in the prescribed manner shall be subject to a 5 percent rate of income tax. If the proceeds from the sold agricultural production and agricultural services account from 65 to 75 percent of the total sales proceeds, taxable income shall be subject to a 10 per cent rate of income tax. Taxable income of other partnerships or other individual (personal) enterprises without the rights of a legal person, shall be subject to a 24 percent rate of income tax. The taxable income used for investment shall be subject to taxation in the manner prescribed by Article 7 of Law of the Republic of Lithuania on Taxes on Profits of Legal Persons. Partnerships of free economic zones and individual (personal) enterprises without the rights of a legal person shall pay for 5 years from the day of registration an income tax at the rate reduced by 80 percent, and for the following 5 years - an income tax reduced by 50 percent. If a foreign investor (investors) has acquired at least 30 percent of a partnership's equity and invested the capital of foreign origin the value of which is not less than 1 million US dollars, these partnerships shall be exempt from income tax for 5 years from the date of their registration, and for the following 10 years shall pay income tax reduced by 50 percent. The portion of income of partnerships of free economic zones and individual (personal) enterprises used for the acquisition of essential fixed assets, research and introduction of new technologies, as well as for investment and capital investment in the zones shall not be included in taxable profit. If a partnership or an individual (personal) enterprise without the rights of a legal person was set up (registered) or foreign capital was invested before December 31, 1993, the part of its income (proportionate to the share of foreign capital in the enterprise's equity) due to the foreign investment and not used for the payment of wages, also reinvested in the enterprise, for five years from the day of the receipt of income shall be subject to income tax reduced by 70 percent. At the expiry of this period, for three years, the part of income due to the foreign investment shall be subject to income tax reduced by 50 percent. If such an enterprise was set up (registered) or foreign capital was invested from January 1, 1994 until August 1, 1995, for six years, the part of income due to foreign investment shall be subject to income tax reduced by 50 percent. An enterprise in which the foreign capital investment of a foreign investor (investors) has reached 2 million USD, for three years shall not pay income tax from the start of the accounting quarter when the income began to be gained. For the subsequent three years the enterprise shall pay income tax reduced by 50 percent. Tax reliefs provided for in this part shall not apply to oil products wholesalers and retailers if their proceeds from sale of these goods amounts to more than 30 percent of their sale revenue. The income of partnerships and individual (personal) enterprises without the rights of a legal person conforming to the requirements of the Law on Small Enterprises shall be subject to income tax reduced by 50 percent. When the income of small enterprises from their manufacturing activities makes up not less than 2/3 of sale proceeds, for the first two years from the setting up (registration) of the enterprise the rate of income tax shall be reduced by 70 percent. The income received by foreign enterprises (with the exception of foreign enterprises referred to in paragraph 9 of this Article) from private (personal) enterprises and partnerships of the Republic of Lithuania without the rights of a legal person for marketing, consulting and agency services shall be taxed at source at the rate of 15 percent, and at the rate of 10 percent - for the right to use trademarks, licences and business names. The income received by foreign enterprises registered in states and zones which are tax havens (territories where taxes are lower than in the Republic of Lithuania) from private (personal) enterprises and partnerships of the Republic of Lithuania without the rights of a legal person shall be taxed at source at the rate of 24 percent. The Government of Lithuania shall establish the list of those states (zones) and the categories of taxable income. Article 25 Patent fee may be established for private (personal) enterprises without the rights of a legal person and partnerships, and for some types of activity - an obligatory patent fee. Enterprises which have acquired the patent shall not pay income tax from the income derived from the activities covered by the patent. The types of activities, minimal and maximal patent fees and the procedure for issuing patents shall be established by the Government of the Republic of Lithuania. The concrete rates of the patent fee shall be established by the municipalities. Article 26 Taxable income shall be calculated by deducting from the gross income the income generation costs specified in Article 5 of the Law on the Tax on Profits of Legal Persons, certified by legally valid documents. When fixed assets are sold at a smaller price than their residual value, gross income shall be not less than the residual value of the assets. The proceeds for sold assets of an enterprise which has been declared bankrupt shall not be included in the gross income. Taxable income of foreign enterprises shall consist of all the proceeds for marketing, consultancy, agency services and for the right to use trademarks, licences, business names received from private (personal) enterprises without the right of a legal person and partnerships of the Republic of Lithuania, without deducting any costs. Article 261 Enterprises holding cash and cash-and-prize lotteries, with the exception of 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 of the Disabled, the Union of People with Disabilities, shall pay into the budget 5 percent of the income from the sales at nominal value of lottery tickets (cards). Enterprises holding 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 of the Disabled, the Union of people with Disability, shall pay into the budget 5 percent of the income from the sales at nominal value of lottery tickets (cards). and shall in a mandatory manner allot to charity and sponsorship 8 percent of the 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. Enterprises holding cash and cash-and-prize lotteries shall pay the income tax in the manner prescribed by this Law. Article 27 In determining the taxable income, in addition to expenses specified in Article 26 of this Law, the sums specified in Article 6 of the Law on Taxes on Profits of Legal Persons shall also be deducted from gross income ( by the same proportion and in the same manner). If the enterprise makes a loss (negative results), it shall be permitted to carry the losses to the following tax year. The carry-over of the tax year losses shall be permitted for the maximum period of three tax years, starting from the year following the formation of losses. Upon the expiry of the above time period, no carry-over of losses shall be permitted. The tax year shall coincide with the calendar year. The procedure for carrying over the losses of the tax year shall be established by the Minister of Finance. Article 28 Income derived from the sale of agricultural goods produced on individual small farm holdings, farmers' farms, with the exception of income derived from the sale of soft-fur carnivorous animals and nutrias and their products, shall be exempt from taxation. Individual (personal) enterprises of creative unions (of architects, artists, designers, photo artists, composers, film makers, scientists, writers, folk artists, theatre, journalists) without the rights of a legal person shall be eligible for a tax relief provided for in Article 8 of the Law on Taxes on Profits of Legal Persons. The amounts of revaluation of long-term fixed assets shall be exempt from taxation in cases and procedure established by the Government of the Republic of Lithuania. Article 29 Municipal councils shall have the right to reduce income tax or to entirely exempt from income tax certain individual ( personal) enterprises without the rights of a legal person and partnerships, by compensating same from the local budget. If the taxpayer is entitled to several tax reliefs under the laws of the Republic of Lithuania, only the biggest relief shall be provided. Tax reliefs established in paragraphs 4, 5 and 6 of Article 24 of this Law shall be applicable when a partnership and an individual (personal) enterprise without the rights of a legal person was set up (registered) or when foreign capital was invested, or when the foreign capital investment by a foreign investor (investors) in the enterprise amounted to 2 million USD before April 1,
2. Article 30 Individual (personal) enterprises and partnerships shall file their returns with the State Tax Inspectorate not later than within 15 days following the close of the current calendar quarter. If the income of foreign enterprises is taxed at source in the manner prescribed by this Law, an individual (personal) enterprise and a partnership without the rights of a legal person must deduct and pay the income tax from the income specified in Article 24 of this Law not later than within 15 days following the end of the month when the income was paid. Article 31 Income tax shall be paid not later than within 20 days following the close of the current calendar quarter. If the tax is not paid when due, default interest shall be charged in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. Article 32 If tax returns are not filed with the State Tax Inspectorate, or if not all income received is declared in the return, the sum computed without applying reliefs established by this Law shall be recovered from the undeclared income (regardless of the expenses), plus a penalty in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. If the expenses are overstated in the return and as a result taxable income is understated, the sum computed without applying reliefs plus a penalty shall be recovered from the understated taxable income without suit in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. If individual (personal ) enterprises without the rights of a legal person and partnerships engage in patentable activities without obtaining an obligatory patent, the sum in the amount of the patent fee and the penalty twice as high as this amount shall be recovered from such an enterprise. V. Taxation of Income Derived by Individuals from Commercial-Economic Activities and Miscellaneous Receipts Article 33 Gross income generated from the rent of property and miscellaneous income not specified in parts II, III and IV of this Law shall be taxed at 20 percent rate of income tax. No expenses shall be deducted from gross income specified in Article 33, with the exception of the sums donated to the beneficiary of charity and sponsorship in the manner prescribed by Law of the Republic of Lithuania on Charity and Sponsorship. Proceeds from the sale of property in excess of the amount established in subparagraph 11 of Article 35 of this Law shall be taxed at 10 percent rate of income tax. Proceeds of the inhabitants from the sold forest products (mushrooms, berries, hazelnuts, medicinal herbs, etc. ) as well as the secondary raw materials shall be taxed at 5 percent rate of income tax without applying the provisions of subparagraph 11 of Article 35 of this Law. For certain types of activities an obligatory patent fee may be established for those natural persons who derive other income. Natural persons who have acquired the patent shall not pay income tax on income derived from the activities for which obligatory patent fee is established. Types of activities, minimal and maximal amounts of the obligatory patent fee, the procedure for the issuing of patent shall be established by the Government of the Republic of Lithuania. Specific obligatory patent fees shall be established by the municipalities. If natural persons derive income without obtaining an obligatory patent, the sum in the amount of the patent fee and the penalty twice as high as this amount shall be recovered from such persons. Article 34 Persons deriving miscellaneous income (in cash and in kind) shall be taxed by the enterprises, institutions and organisations which pay such income to individuals or by the State Tax Inspectorate according to their permanent place of residence. In the cases when the taxpayer receives income (in cash or in kind) specified in Article 33 of this Law from enterprises, institutions and organisations or through them, income tax shall be withheld and paid into the budget by these enterprises, institutions and organisations. Income specified in paragraph 3 of Article 33 of this Law shall be taxed only in cases where said income is paid by enterprises, institutions and organisations. The tax must be paid within 10 days following the close of the month in which that sum was paid out. When natural persons receive income specified in this Article from other natural persons, they must declare it at the State Tax Inspectorate of their permanent place of residence. Income of foreign nationals derived from commercial-economic activities or miscellaneous income generated in Lithuania shall be taxed according to the same procedure as income of the residents of the Republic of Lithuania; however, when taxing income of foreign nationals derived from the sold property the provisions of subparagraph 11 of Article 35 shall not apply. Article 35 Income tax shall not be levied on: 1) income derived from blood-donations; 2) income received by gift from natural persons if during the calendar year the sum of the income is not in excess of 10,000 Litas and income received by legacy, with the exception of the inherited royalty ; also gifts received from spouses, children and parents; 3) received child support; 4) sums received as compensation for loosing a bread winner or capacity to work; 5) sums awarded by court as compensation for material and moral damage and cash compensations not exceeding the rates established by the Government; 6) sums paid for bonds issued by the state or a municipality; 7) lottery winnings; 8) dividends on shares and shareholdings received from the economic entities of the Republic of Lithuania; 9) sums received from compulsory and voluntary insurance; 10) returned shareholding contributions and sums for sold shares; 11) proceeds from the sale of property owned by a resident if the sum of proceeds does not exceed 1 TEM (tax-exempt minimum) per month or when only one article (good) of any value of one or another kind is sold per year; 12) prizes and gifts received for merit in sports and other competitions ; 13) interest received on deposits in the banks and other credit institutions licensed by the Bank of Lithuania; 14) par value of shares issued to shareholders or employees of an enterprise according to the business results of 1992, 1993, 1994 and 1995, or the sum by which the par value of shares issued earlier has been increased; 15) the sums paid from charity funds and organisations (with the exception of allowances paid to the employees of these funds and organisations); 16) allowances given by the Government or municipal authorities; 17) prizes awarded on the basis of a competition from the budget of the Republic of Lithuania or from municipal budgets, from funds or organisations of foreign countries, also by the decision of the Government; 18) death benefits paid in the event of an employee's (former employee's) death by the employers to the spouse or another lineal heir at law, also benefits paid in the event of natural disasters and fires. Article 36 Income tax shall be computed in the following manner: 1) income tax for the current year shall be computed by taking into account estimated income indicated in the return filed by the taxpayer. When the amount of income earned has changed considerably during the taxable year, the income tax can be recomputed; 2) following the close of the year or upon the loss of the source of income, the tax is recomputed taking into account the factual amount of income earned. The difference between the computed amount and the amount due shall be recovered or refunded within a month, and in the event of loss of the source of income, within 15 days from the day the tax return was filed. Article 37 The tax shall be computed on the basis of : 1) a return filed with the State Tax Inspectorate prior to January 15 by persons receiving miscellaneous income. Returns of income generated within a one-year period shall be filed within 5 days after the lapse of one month in which that income was received, and upon losing the source of income - within 5 days; 2) the findings of investigations carried out by the State Tax Inspectorate and other available material bearing upon the income of taxpayers; The tax shall be computed and the owner of the property (principal tenant) or any other person who received income specified in Article 33 shall be requested to pay it in equal instalments by the 15th day of the second month of each quarter. Article 38 Taxpayers on whom the tax was not imposed when due shall be charged tax, incorrect taxation shall be rectified and the tax shall be refunded or recovered in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. The additional tax computed for the preceding period and sanctions shall be paid within the time limits established by Law of the Republic of Lithuania on Tax Administration. Article 39 For failure to pay the tax when due, default interest shall be charged in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. Article 40 When enterprises, institutions and organisations do not withhold income tax from income of individuals specified in Article 33 and do not pay it into the budget when due, this tax and the default interest shall be computed and recovered from the enterprise by the State Tax Inspectorate. The computed income tax and the penalties shall be paid in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. When tax returns are not filed or the income is understated in the returns filed, the computed sum of income tax and the penalty shall be recovered from the owner of the property (principal tenant) and any other person who derived income from the renting of property as well as other income in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. When the State Tax Inspectorate establishes that the proceeds of a resident from the sold property are in excess of 1 TEM (tax-exempt minimum) per month or the resident has sold more than one article of the same kind in a year to different enterprises, institutions and organisations (or through them) and has not notified them about it and therefore has not paid income tax, the income tax computed on the sum paid to him and the penalty shall be recovered from the taxpayer in the manner prescribed by Law of the Republic of Lithuania on Tax Administration. Article 41 Enterprises, institutions and organisations must provide the State Tax Inspectorates with the information pertaining to all the sums (in money and in kind) paid to the residents of the Republic of Lithuania, foreign nationals and stateless persons, with the exception of payments specified in parts II, III and IV of this Law, in paragraph 3 of Article 33, and in Article 35 of this Law (except the provision of subparagraph 11 of this Article with regard to one article of any value of one or another kind). The information about the sums paid to the residents of the Republic of Lithuania shall be provided to the State Tax Inspectorate in the territory of whose jurisdiction the recipient of the income resides. Information shall also be provided in the like manner in those cases when enterprises, institutions and organisations pay sums to the residents of the Republic of Lithuania for one sold article of any value of one or another kind and do not withhold income tax. The information pertaining to the payment of sums to foreign nationals shall be furnished to the State Tax Inspectorate within the Ministry of Finance of the Republic of Lithuania. The information specified in this Article shall be furnished within 10 days following the close of the month when said were paid. . For each overdue day when the information specified in this Article had to be reported, default interest in the same amount as for the failure to pay tax when due shall be recovered; however, the computed sum of the default interest must not be in excess of 300 percent of the sum paid out. Article 42 Municipal councils shall have the right to reduce income tax or to exempt from it separate individuals who derived miscellaneous income, compensating same from municipal budgets. Final Provisions
3. This Law shall apply to taxable income received from July 1,
5. By August 1, 1997, the Government shall establish: 1) the list of foreign enterprises registered in states or zones which are tax havens and the list of categories of taxable income; 2) 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.
6. By September 1, 1997, the Government shall establish the cases and procedure of exemption from taxation of the amounts of revaluation. Vytautas Landsbergis Chairman of the Supreme Council of the Republic of Lithuania Vilnius 5 October 1990 No. I-641 PROVISIONAL LAW OF THE REPUBLIC OF LITHUANIA ON INCOME TAX OF NATURAL PERSONS Supplement 1 (Repealed) PROVISIONAL LAW OF THE REPUBLIC OF LITHUANIA ON INCOME TAX OF NATURAL PERSONS Supplement 2 Rates of income tax which are used while computing tax from monthly wages received at an extra job
7. The 10% rate shall apply to the portion of income up to 0.5 TEM (tax-exempt minimum).
8. The 20% rate shall apply to the portion of income in excess of 0.5 TEM but not in excess of 1.0 TEM.
9. The 35% rate shall apply to the portion of income in excess of 1.0 TEM.