C:\RITA\TAX1.DOC

C:\RITA\TAX1.DOC Official Translation REPUBLIC OF LITHUANIA LAW ON TAX ADMINISTRATION June 28, 1995. No. 1 - 974 (As amended by June 5, 2001.  No. IX-353) Chapter I GENERAL PROVISIONS Article 1. Purpose of the Law This   Law  shall  establish  the  basic  principles and regulations which must be observed in implementing the  tax  laws of  the Republic of Lithuania, furnish a list of taxes applied in the Republic of Lithuania, establish the rights and duties of the tax  administrator,  rights  and  duties  of  the  taxpayer,  the procedure of tax computation and payment, collection of taxes and amounts thereof, as well as the dispute settlement procedure. Article 2. Basic Concepts Concepts employed within the tax law, if the tax  law  does not stipulate otherwise: tax denotes monetary obligation owed by the taxpayer to the state, established within the tax law in order that funds may be obtained to fulfil state (municipal) functions; charge and fee indicate a monetary duty established by law, exacted from a taxpayer for certain services provided for him  by state institutions.  Charges  and  fees  shall constitute an additional source of income for fulfilment of state (municipal) functions; tax  law  is  a  law  of the Republic  of  Lithuania  which establishes  the  tax, charge or fee, or other payment  into  the state (municipal)  budget and funds (amended 24 June 1997) and also this Law  and  the  agreement mentioned in Article 4 of this Law; person is a natural person (individual), a legal person, or an entity which does not possess the rights of a legal person; taxpayer is a person, for whom an obligation to pay taxes is established under the tax law; charge and fee payer indicates a person, who is obliged  to pay  a  charge or fee, established by laws, for services rendered by state institutions; tax administrator is an institution which is responsible for tax administration; tax  administration  comprises the  implementation  of  the rights  and  obligations  of the tax  administrator,  as  well  as rights  and  obligations of the taxpayer, calculation  of  taxes, payment  and  collection, application of liability  for  improper calculation  and  payment  of taxes, distribution  of  taxes  and supplying of information for taxpayers; tax  return indicates a document of tax calculation,  which must  be  completed and filed with the tax administrator  by  the taxpayer or tax withholder according to the procedure established by the tax  law; tax arrears  indicates amount of tax not paid on time according to the procedure prescribed by the Tax Law, by the taxpayer or the tax withholder; arrears in payments indicates amount of taxes, penalties, percent, interest including also, the interest sums accrued on  tax  loans not  paid according to the procedure established by Tax Law,  by  the taxpayer or tax withholder; tax difference denotes the sum to be refunded (taken from the budget) to the taxpayer, which may arise in filing  the tax declaration in accordance with the procedure established by the Law on Tax . (Amended Apr 6, 1999) bad arrears in payments indicates amount of taxes, penalties, percent  and also interest sums added according  to taxed loan agreements, which are impossible to exact due to objective reasons or the collection whereof  is non feasible economically and socially speaking. Bad arrears in payments shall be determined based upon the provisions  of Article 29 of this Law.  tax overpayment indicates amount of tax paid by the taxpayer or  withholder in excess of the tax amount prescribed by tax  law procedure;  a tax amount, which in the course of an audit  is adjudged as too high by the tax administrator, is also considered an overpayment; tax  calculation  is the filling out of  a  tax  return  or another document by indicating, in monetary terms, the tax amount required to be paid into the state (municipal) budget and funds (amended 24 June 1997); tax base is an object, which is appraised to be subject  to taxation  according to the procedure established by tax  law,  to which an established amount of tax (rate) is applied; tax withholder is a person, for whom an obligation has been assigned, according to tax law, to withhold tax from the taxpayer and pay it into the state (municipal) budget and funds (amended 24 June 1997); tax law violation is the result of action which contradicts the tax law; tax  procedure includes the taxpayer, tax base, tax amounts (rates), tax reliefs, penalties and interest, and tax payment  as well as withholding regulations, established by the tax law; tax  relief denotes special taxation conditions established for  the  taxpayer, requiring the payment of  a  lesser  tax,  or deferral of tax payment deadline, or permitting tax payment to be paid in several instalments; activity  denotes all activity of a person, as a result  of which a person could have received, or has received some income. Article 3. Taxpayer Equality In applying tax laws, all taxpayers shall be held equal on the basis of the conditions established by these laws. Article 4. International Agreements If   taxation  regulations  established  by  international agreements  differ  from those in tax laws and  these  agreements have  been  ratified in the Republic of Lithuania,  international agreement regulations shall apply. Chapter II TAXES Article 5. Taxes, State Levies and Other Payments 1.  The taxes, State levies and rentals (fees) for the rent of State land and water bodies from the State Water Fund shall be administered in accordance with this Law shall be as follows: 1) value added tax; 2) excise  duty; 3) natural persons' income tax; 4) legal persons' profit tax; 5) enterprise and organisation immovable property tax; 6) land tax; 7) state natural resources tax; 8) oil and gas resources tax; 9) pollution tax; 10) consular duty; 11) stamp duty; 12) market place duty; 13)  deductions from sales revenue under the  Law  on  Road Stock of the Republic of Lithuania; 14) inheritance or gift tax; 15)  compulsory health insurance contributions  (Amended  6 June 1996). 16) lease tax on state land stock and water bodies belonging to the state water stock. (Amended 2 July 1996) 17) contributions to the Guarantee Fund. 18) State levies; 19)  gaming tax; 20)  tax on registration of industrial property. 5. The State Levy indicated in item 18 (1) of this Article, shall be administered only insofar as this ha been stipulated in the Republic of Lithuania Law on Levies (control of  the collection of the State levies, exaction of an insufficient amount or totally skipped State levy, collected from an institution, due to the fault whereof  an insufficient levy or no levy at all has been collected, term of submitting a request regarding refund of a State levy). 6. The taxes indicated in Paragraph 1 (20) of  this Article, for the registration of the objects of industrial property, shall be administered, according to this Law, insofar as this has been stipulated  in the Republic of Lithuania Law on Registration of the Objects of Industrial Property (control of the collection of the State levies, tax refunds, and  exaction of an insufficient amount, or of a totally skipped tax payment from an institution  due to the fault whereof  an insufficient or no levy at all has been paid). 2. Only  an  appropriate  tax  law,  or  a  decree  by  the Government  of  Lithuania based on such, or another  legal  act passed on the basis of such shall determine the procedure  for imposition of certain taxes. 3. Should the  investor assume the obligation in an investment contract formed according to the procedure established by the Lithuanian Republic Law on Investment, with the  Government of the Republic of Lithuania or its authorised institution, of investing at least 200 mil litas over a three-year period (36 calendar months), from the day of forming the contract, in an economic entity registered in the Republic of Lithuania Enterprise Register, it may be established complying with the wishes of the investor (investors), draw up an agreement of investment, with the investor (investors), which would stipulate that tariffs of direct taxes payable, which had been established by corresponding tax laws in existence at the moment of  investment, shall not be increased for this enterprise (the taxes listed in part 1 of this Article, except the value added tax  and excise tax), for 5 years from the moment of investment, when the investment amount established in the investment contract, shall reach 200 mil litas,  The Government of the Republic of Lithuania shall have the right to extend the term of non-increase of taxes for strategic investors, for up to 10 years. 4. In administering customs  and social insurance taxes, only the standards of this Law, which regulate the procedure of  placing under attachment the taxpayer’s property, shall be applied. (amended 4 Nov 1999) 6. The taxes on the registration of  industrial property, indicated in subparagraph 20 (par.1) of this Article,  shall be administered according to this Law insofar as this has been stipulated in the Republic of Lithuania Law on Taxes of Registration of  Industrial Property ( control of tax payment, tax refunds, exaction of insufficient or totally unpaid taxes form an institution , due to the fault whereof taxes were underpaid or totally unpaid). Article 6. Implementation of Tax Law 1.  The Government of the Republic of Lithuania and, if  an authorisation  is given, the Ministry of Finance shall  implement the tax laws passed by the Seimas of the Republic of Lithuania as well  as  this  Law. No other state institution may  be  assigned implementation  of tax laws, except the Ministry of  Finance,  if this is not provided for in the tax law. 2. In the course of implementing tax laws, the Government of the Republic of Lithuania shall establish appropriate methods and regulations,  ensuring  tax administration,  or  shall  task  the Ministry of Finance to carry this out. 3. No subordinate legislation regarding questions of tax procedure establishment, listed in part one of Article 5 of  this Law,  may  be  adopted without the consent  of  the  Minister  of Finance. Article 7. Tax Administrators 1. The State Tax Inspectorate shall administer taxes listed in part one of Article 5 of this Law. 2.  The  Customs  of the Republic of Lithuania  shall  also administer the taxes listed in part one and two of Article  5  of this  Law,  however  only insofar as it is authorised  under  the Value Added Tax and Excise Tax Laws of the Republic of Lithuania. 3.   The  Environmental  Protection  Ministry  shall  also administer the taxes listed in Paragraphs 7, 8, and 9 of part one of  Article  5  of  this  Law, however  only  insofar  as  it  is authorised  according to Tax on State Natural Resources,  Tax  on Pollution and Tax on Oil and Gas Resources Laws. Chapter III STATE TAX INSPECTORATE Article 8. State Tax Inspectorate 1. The State Tax Inspectorate is a state institution founded at  the  Ministry  of Finance which is financed  from  the  state budget  and  other funds and is accountable to  the  Minister  of Finance. The State Tax Inspectorate is a state institution, established by the Ministry of Finance, funded by the state budget and other funds and accountable  to the Ministry of Finance. it is comprised of the State Tax Inspectorates, who shall be legal persons having their own bank accounts, seals and common symbols. (Amended 2 July 1996) 2. In order to reinforce the material base of the State Tax Inspectorate  and  provide  material  incentives  for  staff,  an additional sum of 30 percent shall be allotted from funds exacted in  the course of an audit. 75 percent of the amount shall be allotted for reinforcement of the material base of the State  Tax Inspectorate,  while the remaining funds shall  be  utilised  for incentives and social guarantees of the tax inspectorate staff. 3. The State Tax Inspectorate is guided by The Constitution of  the  Republic of Lithuania, this and other laws,  subordinate legal acts and regulations and its own regulations. Regulations of the State Tax Inspectorate at the Ministry of Finance shall be approved by the Ministry of Finance while the model regulations shall be approved by the Chief of the State Inspectorate at the Ministry of Finance. (Amended 2 July 1996) 4. The State Tax Inspectorate shall work in co-operation and exchange   information   with  all  tax   administrators,   state institutions and foreign state institutions, which administer the payment of taxes. Article 9. Structure of State Tax Inspectorate 1. The State Tax Inspectorate is comprised of: 1)  State Tax Inspectorate at the Ministry of Finance - the central tax administrator; 2)  State  Tax  Inspectorates at the  Ministry  of  Finance territorial state tax inspectorates - local tax administrators. 2. The local tax administrator shall be held subordinate and accountable to the central tax administrator. Article 10. Central Tax Administrator's Work Organisation 1.  The  State Tax Inspectorate at the Ministry of  Finance shall be headed by a chief who shall be appointed and relieved of his  duties  by the Prime Minister of the Republic  of  Lithuania upon recommendation of the Minister of Finance. The chief of  the State                                                                            Tax  Inspectorate  at the Ministry  of  Finance  shall  be accountable to the Minister of Finance. 2.  The  structure  of the State Tax  Inspectorate  at  the Ministry  of  Finance  shall be approved  by  the  chief  of  the Inspectorate on coordination with the Minister of Finance. Article 11. Local Tax Administrator's Work Organisation 1.   Upon  recommendation  of  the  chief  of  State   Tax Inspectorate at the Ministry of Finance, the Minister of  Finance shall                                                                                                               establish the number of local state tax inspectorates,  as well as their zones of territorial activity. 2.  Chief  of the territorial state tax inspectorate  shall approve  the structure of the territorial state tax inspectorate, taking into   account the   methodical   instructions    and recommendations of the central tax administrator. 3.  Upon the recommendation of the Head of the State Tax Inspectorate at the Ministry of Finance, the Minister of Finance  shall appoint and relieve of his duties the chief of the territorial state inspectorate. (Amended 2 July 1996) The  chief  of  the territorial  state tax inspectorate shall be held accountable  to the  chief  of  the  State Tax Inspectorate at  the  Ministry  of Finance. Article 12. State Tax Inspectorate Employees 1.  State  Tax Inspectorate employees shall be engaged  and dismissed  from work by the chief of the tax inspectorate,  which employs them. 2.  The  central tax administrator shall set  requirements, according  to  which  State Tax Inspectorate employees  shall  be selected and also the procedures according to which employees may be  appointed to higher level positions and their salaries may be increased. These requirements must be connected only with the tax inspectorate  employees' ability to complete work  in  accordance with approved job instructions and position occupied. Article 13. Work Compensation and Social Guarantees of State Tax Inspectorate Laws   of   the  Republic  of  Lithuania  and  subordinate legislation  shall establish the State Tax Inspectorate  employee work and salary conditions and social guarantees. Article 14. Organisation of Information Supply to Taxpayers 1.  The central tax administrator shall organise supply  of information  for  taxpayers  on tax laws  and  other  legislation relevant  to  tax  questions  and  create  programs  to   educate taxpayers. The purpose of this work is to assist taxpayers in the observance of tax laws and subordinate legislation. 2.  The  central tax administrator shall organise  taxpayer education  regarding tax law issues and other  legislation  which regulates tax payment procedure. Article  15. Tax Administrator's Organisation  of  Employee Training The central tax administrator shall organise training (qualification  improvement) of State Tax Inspectorate employees in accordance with training programs prepared for that purpose. Chapter IV RIGHTS AND OBLIGATIONS OF TAX ADMINISTRATOR Article 16. Duties of Tax Administrator 1. The tax administrator shall: 1)  keep records of taxpayers' and other payments into  the state (municipal) budget and funds  (amended 24 June 1997); 2)   control  computation  of  payments  into  the   state (municipal) budget and funds, (amended 24 June 1997) exact interest for late payment and penalties imposed in accordance with tax laws, and also refund overpayments and wrongly exacted taxes, interest and penalties; 3)  implement  municipal decisions regarding  provision  of reliefs of taxes, collections and deductions into the budget and funds (amended 24 June 1997); 4)  apportion  taxes  and  other payments  into  state  and municipal budgets and funds (amended 24 June 1997); 5) organise accounting, valuation and sales of confiscated, ownerless,          state-inherited  property  and  wealth,  as  well  as property, wealth and treasures transferred and included into  the state's revenues; 6)         publish  legislation  or  prepare  its drafts for implementation of tax laws with the authorisation of the  Seimas, the  Government  and the Ministry of Finance of the  Republic  of Lithuania; 7)  give  explanations to taxpayers regarding  tax  payment issues; 8) prepare and provide for the Minister of Finance drafts of tax  laws  and  decrees  of the Government  of  the  Republic  of Lithuania, and  other  proposals concerning  taxation  procedure improvement; 9) conduct inquiry according to his competence; 10) control the giving, receiving and use of charity and support, insofar as this is related to  tax break  application. 11) perform duties specified in other laws.  The local tax administrator shall carry out the  duties prescribed in  paragraphs 3 and 4 of part one of  this  Article, while the central  tax  administrator  shall  carry  out  those contained  in paragraphs 6 and 8. Both the local and central  tax administrators shall carry out the duties prescribed in  all  the other paragraphs. Article 17. Rights of Tax Administrator 1. Tax administrator's officers shall have the right to: 1)  obtain from enterprises, institutions and organisations as  well  as other persons, including banks and other credit  and finance institutions, information required in the performance  of their  duties  and  copies of documents concerning  property  and income of legal, natural persons, or persons without the rights of a legal person. (Amended 2 July 1996) 2) enter without prior notice, upon presentation of official certificate,  a  person's production premises  (including  rental premises)  or territory, in order to establish how the person  is fulfilling his  tax liabilities and to verify the  material  and technical  resources used for activity and the finished products. The  tax  administrator's officer shall also have this  right  in instances  when  residential premises and  other  facilities  are employed  for  the  purpose of activity  and  income  acquisition. Chiefs of enterprises, institutions and organisations as well  as natural persons,  interfering  with  the  right  of   the tax administrator's officer to avail himself of this right  shall  be held  liable in accordance with the procedure established by law. To enter, without prior notice, a taxpayer's territory, buildings and  facilities  (including rental premises) shall  be  permitted only during the taxpayer's work hours. A taxpayer's consent shall be required in other instances; 3) take temporarily from the taxpayer and keep for a period of  up  to 30 days, documents necessary to establish the veracity of  tax computation having left a document receipt statement,  to seal  the  areas for safekeeping of documents, securities,  money and  material valuables, to make document copies or excerpts,  to mark the taxpayer's  documents  in  order  to  prevent   their falsification; 4) furnish the taxpayer with instructions the fulfilment of which is  mandatory  regarding issues  of  tax  computation  and payment,  and other payments to the state (municipal) budget  and funds (amended 24 June 1997) and also on issues of record keeping; 5)  recover  without suit from individual  accounts  in banking  institutions  taxes, penalties and other sums belonging to state (municipal) as  well as other sums belonging  to  the  state and municipal budgets and funds; (Amended 2 July 1998, 24 June 1997) 6) issue instructions to banking institutions to cease money disbursement  and  transfers from enterprise  accounts,  excepting required payments to state (municipal) budgets and funds (amended 24 June 1997) if they do not allow an audit of their payment computations and payments (fail to submit all of the data or documents required for tax payment audit) or if in the course  of  investigation, facts of  income  concealment and incorrect tax computation  are uncovered and  it is not possible to temporarily limit the taxpayer’s right  to dispose of the property belonging to him; (Amended 2 July 1998) 7)  furnish  the  taxpayer with mandatory  instructions  on issues of tax computation and payment; 8) compile protocols of administrative violations of law in cases which   according   to  law   are   attributed   to         the administrator's competence; 9)  perform  personally  or  to  require  other  competent institutions  to  perform  check measurements,  stock  taking  of material valuables and other audit of facts measures,  and require that the books be kept properly; 10)  install  meters and measuring devices within  taxpayer storage   facilities,   production  storage   areas   and   other installations used for work; seal and stamp the taxpayer  storage facilities,  premises  and  equipment;  close  off  the  area  or sections thereof; 11)  temporarily suspend the work of individuals,  if  they avoid to  furnish  the  tax  administrator  with  the  documents required  in connection with tax computation and payment,  or  if some violations of tax laws outlined in Articles 47, 48 and 49 of this Law occur; 12)  obtain  from  the  taxpayer returns  and  explanations relevant to sources of property acquisition; 13) assign, in accordance with the procedure established by laws, administrative sanctions and penalties provided for by  tax laws and also calculate the amount of interest; 14)  address  the  heads  of  a l0l  types  of  enterprises, institutions  and organisations concerning the circumstances  and conditions  interfering  with  the  tax  administrator's   proper performance  of duties. Enterprise heads and other officers  must investigate the tax administrator's directives and inform without delay (no  later  than  on  the day  following  receipt  of  the directive) the administrator of the measures adopted; 15)  attach the property of the taxpayer in accordance with the procedure and grounds established in this Law. (amended 4 November 1999) 16) possess, carry and use a service firearm, in accordance with  the procedure established by the Government of the Republic of Lithuania. 17) (repealed 4 November 1999) 18) establish  indirectly a tax basis, by choosing the methods approved by the Government or its authorised institution. (Supplemented 2 July 1998) 19) postpone credit requirements  resultant of taxation, failure to meet payments of fines and interest, terms of fulfilment or the relinquishment thereof, or exchanging of monetary obligation by another obligation (payment in property,  shares and securities),  in the event a bankrupting enterprise shall be supported or an  agreement of accord be drawn up.  (amended 10 December 1998) 20)         By the procedure established by the Government or its authorised institution to suspend refund  (of tax overpayment (in full or in part) or tax difference (in full or in part) or tax refund (in full or  in part), if there is cause to believe that incorrect documents, falsified documents  have been submitted, and therefore it will be necessary to perform an additional examination in order to appraise the documents and verify the validity of the submitted documents and to obtain additional information from other State institutions and foreign countries on the veracity of the information supplied by the taxpayer.                                      (Amended 6 Apr 1999) 2. The tax administrator shall possess the rights specified in  this Article also with respect to the person withholding  the tax. 3. The tax administrator's officer may avail himself of the rights  provided by other laws and legislation  as  well  as  the rights  provided by decrees of the Government of the Republic  of Lithuania to an officer of the tax administrator. Article 18. Recording of Tax Administrator and his Officer's Actions In  implementing  the rights accorded him  by  law  and  in performance  of his duties, the tax administrator or his  officer shall register performed actions through decisions, whose  forms (act,  certificate, directive,  recommendation, explanation, decision,   warning,  etc.)  and  filling  procedure   shall be established by the central tax administrator. Chapter V TAXPAYER AND TAX WITHHOLDER'S RIGHTS AND OBLIGATIONS Article 19. Payment of Taxes 1.  The taxpayer shall pay only the taxes prescribed by tax laws, observing  the tax laws and also the tax  computation  and payment procedure established by this Law. 2. The tax withholder shall withhold the tax and transfer it in  accordance with the procedure established by laws  and  other standard acts. Article 20. Accumulation and Furnishing of Information 1. The taxpayer, tax withholder must keep books according to the  procedure  established by law, issue the required  documents and  furnish  other information, needed by the tax administrator, to  fill  in  and file a tax return or through some  other  means inform  the  tax  administrator  regarding  tax  computation  and payment. 2.  If  the taxpayer, the tax withholder does not have  the documents  (or  has lost them), required for the  computation  of tax,  they must prepare them within the period prescribed by  the tax administrator. 3.  The  taxpayer, tax withholder must,  according  to  the established  procedure, furnish their address  (action  location) and  work  hours to the tax administrator, and in  the  event  of changes in the data inform the tax administrator within a  period comprising no more than 5 work days. Article 21. Right To Information The taxpayer, tax withholder, having submitted a request to the  tax  administrator, shall have the right to obtain  standard documents, as well as other information required to implement the tax law. Article  22. Confidentiality of Information Concerning  the Taxpayer 1. Information concerning the taxpayer which is supplied to the  tax  administrator or his officer must be held in confidence and used solely for the purposes established by the tax law. 2. The tax administrator's officer maintains confidentiality of information concerning the taxpayer also after terminating his work  contract with his employer, with the exception of instances provided for by this Law. 3. Information concerning the taxpayer may be disseminated: 1) to another tax administrator or his officer, if that  is required in the administration of the same or other tax; 2)  to  courts,  law enforcement and other institutions  in instances provided for by law; 3) to an institution, authorised by the Government of the Republic of Lithuania in order to perform  an analysis of  enterprise activity according to the procedure established by the Government (amended 15 Oct 1998);                 4)  on  the  basis  of  international  agreements  to  tax administrator of a foreign country based on a written request; 5) when guilt of the taxpayer for violations of the tax law has  been  proven  or  when the taxpayer  has  not  registered  a complaint against the actions of the tax administrator within the established period of time and in accordance with the established procedure.  In this instance information concerning the  taxpayer may  be  released insofar as this concerns the violation  of  tax law; 6)   information  concerning  a  taxpayer  may   also   be disseminated  based  on  the presence of the  taxpayer's  written consent or request. 4.  The  recipient  of the information in  accordance  with paragraphs 1, 2, 3 and 4 (amended 15 Oct 1998)  of part three of this Article must keep it confidential. 5.   If  the  tax  administrator  has  disseminated  false information  about  the taxpayer in instances specified  in  part three of this Article, he must correct the error as soon  as  he becomes aware of this fact. 6. If the tax administrator disseminated information to the tax administrator of a foreign country, according to paragraph  4 (amended 15 Oct 1998) part three of this Article, the taxpayer must be advised of this. 7.  The  tax  administrator and also  any  person  who  was privileged  to  confidential information  concerning  a  taxpayer shall  be  held  responsible  for  the  dissemination  of   this information in accordance with the procedure established by  laws, except  in instances when the laws permit dissemination  of  such information. 8. The requirements of this Article shall also be applied to the tax withholder. Chapter VI TAX COMPUTATION, PAYMENT, EXACTION, AND REFUND Article 23. Tax Return Requirements 1.  Every  tax return filed by the taxpayer  with  the  tax administrator  must  conform to the  established  form.  The  tax return  shall be filed at the prescribed time and only  with  the tax administrator for whom it is designated. 2.  The  requirements specified in part one of this Article shall also  apply to the tax return which the person withholding the tax must file with the tax administrator. 3. The forms and filling in procedure of the tax return  or other documents, indicating tax liability, shall be  established by the central tax administrator on the basis of tax laws. Article 24. Computation (Recomputation)Period 1.  Unless otherwise prescribed by the tax law, tax may  be computed  or  recomputed  to cover a period  not  to  exceed  the preceding  five calendar years for which a tax return had  to  be filed with the tax administrator. 2. If, according to the tax law, there is no requirement to file  a  tax  return with the tax  administrator the  tax  may  be computed  or  recomputed no later than during the course  of  the fifth year  following the calendar year, during  which  the  tax should have been, or has been paid. 3.  If  the taxpayer fails to file a tax return or files  a faulty  tax return or otherwise avoids payment of tax and  unless the  tax  law  provides otherwise, the tax  may  be  computed  or recomputed  for  the period not exceeding the past  ten  calendar years, for which a tax return should have been filed with the tax administrator.  This regulation shall also apply  to  the  person withholding the tax. Article 25. Tax Reliefs 1. Only an appropriate tax law regulating the procedure of tax computation  shall determine tax relief/s. This Law  may establish tax, penalty or interest payment reliefs, not linked to the procedure of tax computation or tax rates. Temporary tax  reliefs may  also be established by special laws passed by the Seimas  of the Republic of Lithuania. Tax reliefs established by corresponding tax laws , for free economic zone companies and zone enterprises shall apply insofar as this does not contradict the provisions of the Law on Monitoring of State Aid to Economic Undertakings. 2. A law which shall establish exceptions to taxation procedure, not provided for among the tax laws listed in part one of Article 5 of this Law, shall be considered a special tax law. (Amended 2 July 1996) 3. according to the procedure and instances when the bankrupting enterprise shall be supported  or a peaceable agreement is reached, the monetary obligations, may be accounted for not only by money  also by another established form (property, shares and securities), the term of their implementation may be postponed or the requirements arising from these monetary obligations. 1.  In instances where the taxpayer fails to agree with the tax sum computed by the tax administrator, he must prove that the calculated sum is incorrect. 2. If the taxpayer fails to have the accounting documents in his  possession, totally fails to keep accounting or  if  it is established that the documents have been falsified, and  also  if he  fails  to  submit  to  the  tax  administrator  the  required information, the tax administrator shall have the right to impose taxes on  the  taxpayer by applying indirect  methods.  In  this eventuality the taxpayer shall be required to prove that the  tax has been incorrectly calculated. (repealed 2 July 1998) 3. An indirect method of taxation involves regulations which are  established by the Government of the Republic  of  Lithuania and  ways of establishing a tax base in the eventuality when  the taxpayer and the tax withholder do not have accounting documents, do not keep the documents, has not all of the documents needed by the tax administrator, and also when accounting documents are not genuine or are falsified, or when due to other causes efforts  to establish a tax base in accordance with the procedure established by law prove unsuccessful. (repealed 2 July 1998) 4.   If  a  great  disparity  or  inconsistency  with  the established norms exists between the taxed income, or the  income declared  by  the  taxpayer, or the income proven  through  other means on  the one hand and the property acquired by the taxpayer or  other expenses incurred by him which are indicated by a large amount   of consumption  elements  on  the   other, the tax administrator shall have the right to tax the taxpayer with  such an  established sum of income which according to his computations is  required to acquire such property or consumption elements. In this  case  it  is the taxpayer who must prove that  the  tax  is determined incorrectly. (repealed 2 July 1998) 5. The  consumption element signifies  the  sum  total  of material  and non-material goods suitable for short or  long-term consumption. (repealed 2 July 1998) 6. In cases when a taxpayer fails to file a tax return with the tax   administrator  in  accordance  with   the procedure established  by law, the tax administrator himself  shall  assess the  amount  of  tax  owed by the taxpayer. This  amount  of  tax liability shall be determined (assessed) in accordance  with  one of the methods cited below: 1) based on information concerning the taxpayer  that  the administrator possesses from earlier returns filed  with  him  by the  taxpayer  or other documents, or based on other  information obtained  from  individuals  involved  in  the  same  or  similar activity; 2) based on every other piece of information which the tax administrator possesses concerning the taxpayer (repealed 2 July 1998). Article  261. Filing of Data and Information with  the  Tax Administrator 1.  While settling mutual accounts and making cash payments for  goods  and  services  to foreign  entities  (except  natural persons),  enterprises,  institutions and  organisations  of  all types which  have been registered in the Republic  of  Lithuania must  file  with the local tax administrator, in accordance  with the procedure established by the Ministry of Finance, data on the amount  in  excess of 10,000 Lt paid out per day to one  economic entity. If the amount is paid out to a foreign economic entity in foreign currency it shall be calculated according to the official litas rate  of the day and the litas exchange rate announced  by the Bank of Lithuania. 2.  The data specified in Par. 1 hereof shall be filed with the  tax  administrator  in  whose territory  of  activities  the economic entity that has received income is registered, within 10 days after the close of the month when the amounts have been paid out.  Data on the amounts paid out to foreign entities  shall  be filed with the central tax administrator. 3. Persons, who have failed to submit or have been late in submitting the information stipulated in part 1 of this Article, shall be held administratively liable. (Amended 2 July 1998). 4.  Commercial  banks must by the 5th day  of  every  month furnish  the  central tax administrator with information on all types of accounts opened and closed by economic entities in  the previous month. 5. Furnishing of incorrect information concerning the opened accounts  or  failure  to  furnish  information  shall  make  the managers  of  commercial  banks liable  in  accordance  with  the procedure established by the Code of Administrative Violations of Law (Amended 13 June 1996). Article 27. Audit of Tax Computation and Payment 1.  Having  completed an audit, the tax administrator's officer/s shall draw up an act signed by the officer/s  who  have conducted  the tax audit as well as by the  head  of  the verified  enterprise,  institution, organisation  and  the  chief finance officer (accountant) or natural person. 2. Refusal to sign an audit document (act) shall not exempt  the  taxpayer  from the payment  of  taxes,  interest  or penalties. 3.  Officers  of the tax administrator shall  independently select taxpayers subject to an audit and determine the  scope and time of an audit. 4. The taxpayer and the person withholding the tax shall be obliged to provide  suitable  working  conditions   for tax administrator's  officers, to furnish all documents  required  to carry out tax computation and correct payment audit. 5. In the event it should become established  in the course of an audit, that the registration document submitted by a taxpayer, has no legal value, because it lacks one or several obligatory requisites stipulated in the normative acts, an officer of the tax administrator shall allow the document to be supplemented in accordance with the procedure established by the Minister of Finance. A document which over the stipulated period of time has been supplemented with the lacking requisites shall be considered as having legal power and no economic sanctions will be  applied. (Amended 2 July 1998) Article 271. Indirect Determination of Tax Base Should  it prove impossible to determine a tax base in accordance with the procedure established by the Tax Law, the tax administrator, taking into consideration  the facts, circumstances and other information on hand, shall have the right   to indirectly determine the tax base and to select the methods of tax base determination. The Government or an institution authorised by it  shall approve the methods of indirect determination of the tax base (Supplemented 2 July 1998) Article 272.  Tax Estimation According to Documents of State Institutions The  tax  administrator shall have the right to estimate the tax on the basis of the  acts of state institutions or other documents in those instances, when the aforementioned institutions shall,  in keeping with their competence, conduct  audits or revisions  of the commercial, economic or financial activities of taxpayers and identify violations of the Tax Law,  however are not authorised to conduct the activities of tax administration in accordance with the procedure established by this Law. Copies of documents confirming violations, calculation data or other supplements shall be submitted to the tax administrator along with the acts. Under such circumstances, the tax administrator is not obliged to conduct an additional audit of the taxpayer’s commercial, economic or financial activity.   Having estimated  the tax in this fashion, the tax administrator’s officer shall draw up an act in accordance with the procedure stipulated in Article 27 of this Law.  Under these circumstances, when doubts shall arise  concerning the soundness and accuracy of the estimates of the aforementioned institutions, the tax administrator  shall have the right to request  that they conduct a repeat investigation, indicating specifically, the sources of his objections, or  must himself conduct a repeat investigation  according to the procedure established by this Law, whether the taxes have been correctly estimated and paid.  (Supplemented 2 July 1998) Article 28. Tax Distribution 1.  Taxes  and  other payments into the  state  (municipal) budget and funds  (amended 24 June 1997) shall be distributed as prescribed in the Law on Budgeting of  the  Republic of Lithuania and tax laws. In  the  absence  of indication  as  to  where taxes or other sums  belonging  to  the budget  are  to  be accumulated they shall be included  in  the state budget. 2.  Income  from interest and penalties for  late  payment, underpayment  or total non payment of taxes shall be  accumulated in  like  fashion  as  taxes for the improper  payment  of  which interest or penalties had been computed. Article 29. Tax Payment And Exaction 1. The Tax Law shall establish the term of tax payment. 2. The  unpaid amounts of money, brought to light  during an audit by the tax administrator and the computed interest  must be paid no later than within a period of 20 days, while penalties should be paid within the time limits established in Article 52 of this Law, counting from the day when the taxpayer received the audit act. (Amended 2 July 1998) 3.  The statute of limitations shall not be applied to  the payment and exaction of computed tax, excluding exceptions stipulated by this Law, when the arrears in payments is acknowledged as bad. The above regulation  shall also apply with respect to imposed interest, penalties and interest received according to loan agreement payments. (Amended  2 July 1998) 4. Should the payments paid by the taxpayer fail to suffice to include all of the monetary obligations, these payments shall be included correspondingly to the same order sequence procedure, as shall be indicated by the taxpayer in the documents relevant  to payment of these payments. Should the taxpayer fail to indicate the order sequence of accounting of the monetary obligations, the taxes shall be included first, after that, the penalties followed by interest, followed by interest on finance charge interest according to the loan payment agreement. The paid sums shall be included according to the procedure established by the Central Tax Administrator. 1)  all of the taxes payable shall be included proportionately, i.e., payments paid by the taxpayer, should they be insufficient to cover all of the taxes payable, they  shall be proportionately distributed for all of the payable taxes, taking into consideration  the amount of the sum  of each of them; 2)  payments remaining following inclusion of all taxes payable, if they do not suffice to include all of the penalties, shall be proportionately distributed among all of the penalties, taking into consideration the amount of the sum; 3)  payments remaining following the inclusion of all payable taxes and penalties, if they will not suffice to include the interest on all taxes payable, shall be proportionately distributed among  all of the interest, taking into consideration the amount of interest sum on every tax. 4) payments remaining following the inclusion of all taxes payable, all penalties, all  interest on taxes, if they will not suffice to cover all  of the interest on penalties, shall be proportionately distributed among all of the interest on penalties, taking into consideration the amount of each sum of penalty interest; 5) payments outstanding after all of the taxes payable, all of the tax interest, all of the interest on penalties, if these do not suffice to cover the interest of all of the loan payment agreements, shall be distributed proportionately among all the interest of loan payment agreements, taking into consideration the amount of the sum of interest of each loan agreement; 6) payments outstanding after all of the taxes payable, all penalties, all interest on taxes, all interest on penalties, all of the interest on the payment of loans according to agreement, if they  will not suffice to include all of the interest from the interest returns  according to loan payment agreements,  shall be proportionately distributed among all interest on returns  according to loan payment  agreements, taking into consideration  the amount of the sum of interest on each loan payment agreement; 5. The sums   paid in accordance with loan payment agreements  shall be included  according to the procedure established by the Minister of Finance. 6. In an instance of exaction, if property does do not suffice to include all of the monetary obligations, they shall be included according to the procedure established by the central tax administrator. 7. A taxpayer’s payment debt shall be acknowledged as  bad if it can not be exacted for objective reasons or which it would not be expedient to exact from the social and (or) economic point of view, i.e. , the debts in payments shall be adjudged as bad, if the following factors  are present: 1)  taxpayer (natural person) has died, and it is not possible to exact the arrears from the inheritance;  the taxpayer (legal person) has been liquidated; 2) the Government re-organises an enterprise which is going bankrupt, and a certain portion of property of the  enterprise’s are being transferred to it and thus, the enterprise is relieved from the arrears or a portion thereof, or a release agreement is drawn up with the enterprise which under bankruptcy and it is relieved from a portion of the arrears;  3) it would be inexpedient to exact the debts in taxes and penalties, which have accumulated by December 31, 1998., and the per cent linked with these tax and penalty debts, since a taxpayer has in accordance with the procedure established by the Government, has settled these debts in taxes and penalties, which have accumulated  by December 31, 1998, in shares and assets and also, has paid all of the payable taxes which have accumulated since December 31, 2000, prior to the decision to acknowledge these tax debts as bad; 4) it shall be inexpedient to exact the debt, which has accumulated since December 31, 1999, in those instances and such amounts, when it shall terminate by including contrary demands of taxpayer and state (municipality), This provision shall apply including the unpaid declared value added tax; which has accumulated for  work completed prior to December 31, 1999, which art designated to be funded in 2000 from the money in the Privatisation Fund, as well as the taxpayer’s demands set before the Privatisation Fund for the work completed prior to December 31, 19979, but not paid for. 5) it shall be inexpedient to exact arrears, since one entity of the monetary obligation  (debt)  and the other entity of the monetary obligation (creditor) shall be one and the same person; 6) after more than 1 year has elapsed from the day, when exaction efforts were to be initiated (a notice of demand has been sent to voluntarily fulfil monetary obligations), the property have not been found or the property  is not liquid (it is impossible to sell it), also if the property which have been found, only sufficed to cover the monetary obligation, the outstanding portion of the arrears shall be acknowledged as bad; 7) expenses involved in exaction shall be larger than the arrears; 8) it shall be inexpedient to exact arrears in payments, since the economic (social) condition of natural person is difficult: natural person shall require (it is being provided for him already) state support (natural person has reached pension age, is handicapped, requires medical treatment, medical prophylactics and rehabilitation, person is unemployed, receives social assistance). Circumstances attesting to a difficult (social)situation must be confirmed with documents issued by  competent institutions. This principle of acknowledging the arrears as bad shall only be applied to taxpayers who are natural persons or enterprises not having the rights of legal persons, when the (social) circumstances of owners or members of these enterprises, are difficult. 8.  Payment arrears of taxpayer, which have been acknowledged as bad for reasons indicated in Item 1 of  Part 7 of this Article, shall terminate and be written off from the revenue accounting documents of the budget, when the chief of the regional tax Inspectorate  recognises  by his decision these arrears as terminated. 9. The arrears in payments of a taxpayer, which have been acknowledged as bad  for reasons indicated  in Items 2,3,4, and 5 of Part 7 of this Article, shall terminate and be written off from budgetary accounting documents, when the chief of the State Tax Inspectorate at the Ministry of Finance adopts a decision to exempt a taxpayer for these  arrears in payments. 10. The  arrears in payments of a taxpayer, which have been acknowledged as bad for reasons indicated in Items 6,7 and 8 of Part 7 of this Article, shall be placed with the  arrears , which are not exacted on a  priority  basis and which are not taken into account in planning budgetary revenues, when the chief of the regional state tax inspectorate, makes the decision to place them among such arrears. These arrears will be revised according to the procedure established by the Minister of Finance, in seeking to explain exaction possibilities and expediency. Having established that there exists such a possibility and that is shall be expedient to exact the arrears, these shall be exacted. 11.  Once the arrears in payment shall be acknowledged as bad, based upon the reasons  in Part 7 of this Article, the bad arrears in payments, as well as  interest linked to non payment of taxes or late payment thereof with the interest  linked with the unpaid or a penalty  paid late, taxes postponed according to the loan payment agreement, interest  linked  to interest and penalty sums, increased  interest and interest charges. 12. The Minister of Finance shall determine the procedure of acknowledging the  arrears in payments of a taxpayer as bad, conclusion and  inclusion thereof with arrears in payments in the local budgetary income accounting documents of the local tax  administrator , which shall not be accorded priority exaction  and which are not taken into account in planning budgetary income, the writing off of these arrears from the accounting documents of the local tax administrator and the procedure of accounting and methods of calculating exaction expenses. (Supplemented 2 July 1998) Article 30. Notice of Demand to Fulfil Tax Obligations Voluntarily 1. The tax administrator, prior to availing himself of his right to exact the unpaid tax, interest, penalties and other payments (except for the declared tax and interest on this tax) by compulsory means, shall send the taxpayer an notice of demand to pay the tax, interest, penalties and other payments  voluntarily. The notice of demand shall be sent when: 1. the taxpayer has failed to pay (transfer) within a 20-day period, the computed taxes, interest, penalties and other payments resultant from the audit on whether the tax had been estimated and paid correctly on the taxes, interest, penalties (according to the time limit set in Article 52 of this Law) and other payments stipulated by the act,  (if the taxpayer does not appeal, in accordance with the procedure stipulated in the Tax Law, regarding  the sums or penalties assigned in the audit act and does not ask for postponement of the payment of these sums);   2)  the decision  regarding the taxpayer’s appeal comes into effect and  the right is present to exact tax according to Article 57 of this Law, or on the day following,  the taxpayer’s  receipt of a negative decision concerning his request to postpone the time limit  for payment of the sums calculated and the penalties imposed in the course of the audit; 3) agreement of loan payment is terminated. 2. Upon establishing the arrears of declared tax  and interest on this tax, the notice of demand shall not be sent. The taxpayer shall have the right to voluntarily pay the declared tax  and the interest on this tax within a period of 20 days from the expiration of the time limit established by the Tax Law, for payment of declared tax.. (Amended 2 July 1998) 3. The notice of demand to voluntarily pay the tax, interest, penalties and other payments must indicate: 1) name of tax administrator; 2) name of taxpayer; 3) date of issuance of notice of demand; 4) taxpayer's identification number; 5) payable amount of tax and amounts in connection with  it (interest, penalties); 6) period during which the taxpayer must voluntarily pay the amounts indicated in the notice of demand; 7) account into which the stated amounts must be paid; 8) notice of demand  indicating  that,  in  the  event  the  amount specified in the warning is not paid voluntarily, these sums will be forcibly exacted. 4. The tax administrator shall set a 20-day time-limit, from the day of issuance of notice of demand in which the taxpayer is allowed to pay the sums indicated in the notice of demand. (Amended 2 July 1998) 5.  In  the  event that the taxpayer refuses to accept  the notice of demand,  or if it is not possible  to locate him at his registered  office,  the person  delivering the notice of demand indicates this on the notice of demand and returns  it  to the tax administrator. The person delivering  the notice of demand shall write the notation concerning the taxpayer’s refusal to accept the notice of demand and confirmation of the motives for refusal, shall be made by the person delivering the notice of demand. The taxpayer's refusal to  accept  the notice of demand shall be held tantamount to the notice of demand having been given to  him.  The notice of demand shall also be considered delivered  in  the event that the taxpayer is not located at his residence at  the address indicated by him and during his working hours, on two separate occasions. (Amended 2 July 1998) Article  31. Tax Administrator's Right To Exact Taxes, Interest, Penalties and Other Payments from Taxpayer's Property 1.  The tax  administrator shall acquire the right to exact taxes, interest, penalties and other payments from the property of the taxpayer, against which an exaction may be applied in accordance with  the Republic of Lithuania Civil Process Code if: 1)  the taxpayer fails to pay taxes, interest, penalties and other payments, specified in the tax administrator’s notice of demand; 2) the taxpayer fails to pay the sum indicated in the submitted tax declaration and the interest thereof, within 20 days of the time limit termination for payment of declared taxes, as established by the Tax Law. 2. The right  of exaction of taxes, interest, penalties and other payments , shall be acquired on the day following the expiration of the time limit specified in the notice of demand of voluntary payment of taxes, interest, penalties and other payments, and if a notice of demand is not being sent, on the day following, the expiration of the time limit established in Paragraph 2 of Part 1 of this Article. 3. The right to exact taxes, interest, penalties and other payments from the taxpayer's property, shall disappear on the day the taxpayer pays the tax arrears (interest, penalties and other payments). (Amended 2 July 1998) Article 32. Grounds for and Ways of Attachment of Taxpayer’s Property and the Amount of Attached Property 1. Attachment  of  a  taxpayer’s property  shall be applied in accordance with the procedure established by this or other laws, shall be applied to a taxpayer’s rights of ownership of property or managing, use and disposal of individual compound sections of this right constitute a compulsory, temporary restriction in striving to ensure  collection of tax  arrears. 2. The amount of a taxpayer’s attached property shall equal that which would actually be required to fully assure arrears collection and covering of expenses resulting from  collection. While  property is being attached, the taxpayer shall have the right of declaration before the tax administrator, as to what items should first be targeted for collection, however the tax administrator shall not be bound to satisfy the request, should this interfere with properly assuring the collection of tax arrears and expenses linked to impounding of property. 3. A taxpayer’s property may be attached, if the taxpayer failed to pay (transfer) taxes, interest, penalties, or other payments in accordance with the procedure established by laws or if, upon  completion by the tax administrator’s officers of a verification act relevant to payment and correct calculation of the tax, which specifies the assigned  taxes, interest and other payments and (or) designated penalties, a danger is present that the  taxpayer may conceal, sell or otherwise lose  the property belonging to him and it may become impossible to exact taxes, interest, penalties and other payments.   4. The taxpayer’s property may be attached also, if in the course of verification  (when in the course of verification a presence of Tax Law violations is established) on whether or not the tax has been calculated and paid correctly, the danger exists that the taxpayer may conceal, sell  or otherwise lose the property belonging to him and thus, it may prove to be difficult or impossible to exact the calculated taxes, interest and (or) designated penalties. In this instance, only such property of taxpayer may be attached, which shall be entered in the register of property. The attachment of property shall be lifted in the event a tax arrears has not been established during verification. 5. A taxpayer’s  right of ownership to the property may be  limited in full, prohibiting the taxpayer to dispose, use and administer the property. In this instance, the property of the taxpayer shall be transferred for safekeeping or transferred to be administered by the tax administrator.  A taxpayer’s right of ownership may also be limited in part, with only certain integral parts of ownership being limited. Upon attachment of property, certain non-ownership rights, which are afforded to the taxpayer by the attached property, may be limited as well and it may be prohibited for other persons to transfer property to the taxpayer, whose right of ownership to this property has been limited, and also to fulfil  other obligations of the taxpayer, whose right of ownership has been limited. The actual manner of attachment  (limitation of the right of  ownership or separate integral parts of this right) of a taxpayer’s  property and extent of the attached property shall be indicated in the property attachment act. 6. The attachment of a taxpayer’s property shall be lifted when it becomes no longer necessary.    ARTICLE 321. Decision to Place Property Under Attachment                                      1. The decision to place property under attachment  shall be made official by an act of attachment of property. 2. The act of attachment of property must indicate the reasons for limitation of the right of ownership and: 1) date and place of adoption of the decision; 2) grounds for attachment of property: 3) taxpayer, whose property is being attached including, the natural pers …