PROVISIONAL LAW                                        
                                                                                
                ON INCOME TAX OF NATURAL PERSONS                                
                                                                                
                                                                                
                            Chapter 1                                           
                                                                                
                       General Provisions                                       
                                                                                
     Article 1.Income tax of natural persons shall be paid by:                  
                                                                                
       (1)   persons  deriving  income  through  their  labor  at               
enterprises, institutions,  and organizations on the territory of               
the  Republic   of  Lithuania   and   at   foreign   enterprises,               
institutions and organizations owned by Lithuania;                              
                                                                                
       (2)   permanent  residents of  the Republic  of  Lithuania               
deriving income  from inhabitants as well as deriving income from               
enterprises, institutions  and organizations  on the territory of               
Lithuania and  beyond its  boundaries not  connected  with  labor               
relations;                                                                      
                                                                                
       (3)   private  enterprises or  partnerships with rights of               
natural persons  that  derive  income  from  commercial  activity               
registered in  the established  manner.   Foreigners and  persons               
possessing no  citizenship of the Republic Lithuania pay this tax               
in the  same manner as citizens of the Republic of Lithuania.  If               
international agreements  provide for  a different  procedure  of               
paying, the income tax is paid as provided by these agreements.                 
                                                                                
                                                                                
     Article 2.Income tax shall not be levied on:                               
                                                                                
       (1)   retirement  and old-age pensions paid out from state               
social insurance funds, and state and local government budgets;                 
                                                                                
     (2)  stipends of students.                                                 
                                                                                
       Article  3.Income received  in foreign  currency shall  be               
subject  to   taxation   according   to   specially   promulgated               
regulations.                                                                    
                                                                                
                                                                                
                            Chapter 2                                           
                                                                                
           Assessment of Taxes on Income Derived from                           
             Sources Connected with Labor Relations                             
                                                                                
     Article 4.Income received at the principal job and connected               
with the  labor relations  shall be subject to taxation according               
to the  income tax  rates provided by the Supplement to this law,               
having subtracted from it the tax-exempt minimum.                               
                                                                                
     Article 5.The tax-exempt minimum income earnings received at               
the principal job from the sources connected with labor relations               
shall be:                                                                       
                                                                                
     (1)  for 1st group invalids - 250 Rb.                                      
     (2)  for 2nd group invalids - 200 Rb.                                      
     (3)  for 3rd group invalids - 150 Rb.                                      
     (4)  for persons with three and more children under 18 years               
of age -200 Rb.                                                                 
       (5)   for  the mother or father in case of a single parent               
family with  one child  under 18  - 150  Rb, and with two or more               
children under 18 - 200 Rb.                                                     
                                                                                
       (6)   for  employees of enterprises producing agricultural               
products whose  income generated  from the sale of goods accounts               
for 80 percent of gross income - 150 Rb.                                        
       (7)   for  other persons not indicated in Par. 1-6 of this               
Article - 100 Rb.                                                               
                                                                                
     Additionally, for  1st and  2nd group  visually  handicapped               
persons and for parents with at least one disabled child, the tax               
shall be further reduced by 30 Rb.                                              
                                                                                
     Article 6.The following monthly earnings in cash and in kind               
received at a principal job from the sources connected with labor               
relations shall be included in taxable income:                                  
                                                                                
      (1)  wages, including various additional payments connected               
with temporary disability, pregnancy and childbirth, financed out               
of insurance funds - the total amount calculated for that month.                
                                                                                
       Sums  of earnings payable by enterprises, institutions and               
organizations 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 considered  in proportion  to the number of months worked (but               
not for a period in excess of 12 months);                                       
                                                                                
     (2)  one-time bonuses, taxable allowances 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  out               
proportionately  to  the  number  of  recorded  months  (but  not               
exceeding 12  months) and  shall be subject to taxation at income               
tax rates provided by Supplement 2 to this law.                                 
                                                                                
                                                                                
     Article 7.The following shall be exempt from taxation:                     
                                                                                
       (1)   social security and social benefits from state funds               
and social  insurance allowances, excluding temporary disablement               
and maternity allowances;                                                       
          benefits administered by the government of the Republic               
or local  governments and  financed  out  of  charity  funds  and               
organizations;                                                                  
               benefits paid  by  enterprises,  institutions  and               
organizations on the death of a member of an employee's family;                 
                                                                                
       (2)   sums  paid out  to  refund  business  trip  expenses               
established by  existing labor  laws, and pecuniary compensations               
for material damage not exceeding established norms.                            
                                                                                
      Taxable income also shall be reduced by the amount expended               
on charity.                                                                     
                                                                                
        "Charity"  means  transference  of  a  person's  earnings               
according to  his application  to  organizations  which  performs               
charity functions  set forth  in their statutes (regulations) and               
also  educational,  health  care,  sports,  and  social  security               
institutions financed  out of  state or local government budgets,               
if  said  institutions  and  organizations  do  not  provide  any               
facilities for this person.                                                     
                                                                                
                                                                                
       Article 8.The income earned at extra jobs and set forth in               
Article 6  of this  law shall  be subject to taxation at the rate               
specified in Supplement 2.                                                      
                                                                                
       "Principal  job" means  that enterprise,  institutions  or               
organization where employee's work record book is kept.                         
                                                                                
     Article 9.Income tax at the rates specified in Article 4 and               
8  of   this  law   shall  be   withheld  by  those  enterprises,               
institutions and  organizations which  assessed and  paid out the               
income as  well as  by individual  employers  who  pay  wages  to               
persons hired by them.                                                          
                                                                                
       Article  10.Enterprises, institutions,  organizations  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.                                               
                                                                                
       It  is prohibited  to pay  income tax  from the  financial               
recourses of an organization.                                                   
                                                                                
     Organizations and  individual employers  having no  clearing               
accounts with  the banking  institution, or  who pay  wages  from               
their current  receipts, shall  file payment  orders to a banking               
institution for  the payment  of withheld  income taxes not later               
than the day after the wage was paid out.                                       
                                                                                
       Article  11.Enterprises,  institutions  and  organizations               
possessing subsidiaries  located on  the territory of other local               
governments shall transfer the income taxes withheld from incomes               
of employees  of those  subsidiaries  to  that  budget  which  is               
located on the same territory.                                                  
                                                                                
      Article 12.Refunds of overpaid income taxes are allowed for               
a period  not exceeding  2 years  from the  month  in  which  the               
overpayment was discovered.                                                     
                                                                                
       Article  13.For unpaid  sums, whether  or not  withheld as               
taxes, said  sums plus  a penalty  of 300  percent of  the unpaid               
sums,  shall   be  recovered   from  the  delinquent  enterprise,               
institution or organization, without a suit, but a claim for such               
sums shall extend only to the preceding 2 years.                                
                                                                                
     An enterprise, institution or organization can recover up to               
3 months of unpaid sums of income tax from an employee, which are               
calculated from the months when the underpayment was discovered.                
                                                                                
       Article 14.If the sums of tax withheld are not transferred               
to the  budgets when due, interest at the rate of 0.5 percent for               
each day thereafter is charged on the amount due.                               
                                                                                
     Article 15.Income of clergymen earned from the believers for               
the performance  of religious  rites  is  subject  to  tax  rates               
established under Chapter 2 of this law and the tax is imposed in               
the manner prescribed by Chapter 5.                                             
                                                                                
                                                                                
                            Chapter 3                                           
                                                                                
              Imposition of Income Tax on Royalties                             
              Paid to Authors and their Descendants                             
              for Works of Science, Literature, Art                             
                   and Other Individual Works                                   
                                                                                
       Article  16.The Royalty  paid to  authors and their lineal               
descendants for  works of  science, literature,  art, discoveries               
and inventions  for other individual 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               
of 1000 rubles for each discovery or invention.                                 
                                                                                
       Article  17.Income tax  on royalties shall be assessed and               
withheld where they are paid out.                                               
                                                                                
      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 1st and 2nd group invalids irrespective of               
their age)  are eligible  for the  50 percent reduction of income               
tax computed under this Article.                                                
                                                                                
       Article  19.Erroneously assessed income tax imposed upon a               
royalty  for   works  of  science,  literature  and  art  can  be               
reassessed and  recovered for a period not exceeding 2 percentage               
years.                                                                          
                                                                                
     Article 20.The underpaid sums of income tax, not withheld or               
withheld, as  well as  a penalty equal to 300 percent of the sums               
due, may  be recovered  without initiation  of a  lawsuit from an               
enterprise, institution or organization which has paid out such a               
royalty.                                                                        
                                                                                
     Article 21.The  overpayment tax  is allowed  to be  refunded               
only for  the period not exceeding the 2 preceding years starting               
from the month when the overpayment was discovered.                             
                                                                                
     Article 22.If  sums of taxes withheld are not transferred to               
the budget when due, interest at the rate of 0.5 percent for each               
day thereafter is charged on the sums not transferred.                          
                                                                                
       Article 23.Councils of local governments have the right to               
reduce income  tax for certain tax-payers, or to exempt them from               
income tax, by compensating same from the local budget.                         
                                                                                
                                                                                
                            Chapter 4                                           
                                                                                
         Taxation of Income Derived from the Commercial                         
          Activity Registered in the Established Manner                         
                                                                                
       Article  24.The taxable  income of  partnerships producing               
agricultural goods the sales revenues of which make up 80 percent               
of  total   earned  income   derived  from   commercial  activity               
registered in  the established  manner is subject to a 10 percent               
rate of income tax.                                                             
                                                                                
       The  taxable income  of other  partnerships and of private               
enterprises with  the rights  of natural  persons,  derived  from               
commercial activity  registered in  the  established  manner,  is               
subject to a 30 percent rate of income tax.                                     
                                                                                
       Article  25.Private enterprises  and partnerships with the               
rights of  natural persons  can be  subject  to  a  license  fee.               
Having obtained the license, enterprises do not pay income tax on               
income derived  from the  activity indicated in the license.  The               
rate of  license  fee  is  assessed  by  the  councils  of  local               
governments of the higher level.                                                
                                                                                
       Article 26.Taxable income shall be calculated by deducting               
the following certified input costs from gross income.                          
                                                                                
     (1)  material expenditure and other comparable expenditure;                
       (2)  depreciation charges providing for the replacement of               
fixed assets;                                                                   
     (3)  labor costs;                                                          
     (4)  social insurance premiums;                                            
     (5)  compulsory insurance premiums;                                        
     (6)  land and value-added taxes;                                           
     (7)  interest on bank credits;                                             
     (8)  environmental expenditures.                                           
                                                                                
       Article 27.When computing taxable income, expenses related               
to the  following shall be entirely or partly deducted from gross               
income:                                                                         
                                                                                
     (1)   charitable, cultural,  educational and  other socially               
oriented expenses;                                                              
          and                                                                   
       (2)  scientific research, design and construction expenses               
and expenses associated with introducing new technology.                        
                                                                                
       The rules for deducting expenses from gross income are the               
same as in computing tax on the profit of legal persons.                        
                                                                                
       Article  28.Income derived  from the  sale of agricultural               
goods produced  on  individual  small  holdings,  farm  holdings,               
private enterprises  with the rights of natural persons excluding               
income derived  from the sale of soft-fur carnivorous animals and               
nutrias  and   their  products,   flower-growing  and  greenhouse               
production shall be exempt from taxation.                                       
                                                                                
       Article  29.Councils of  local governments  shall have the               
rights to  reduce income tax or to exempt from income tax certain               
private enterprises  and partnerships  with the rights of natural               
person by compensating the same from the local budgets.                         
                                                                                
       Article 30.Private 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.                                                                        
                                                                                
       Article 31.Income tax is due not later than within 20 days               
following the  close of the current calendar quarter.  Failure to               
pay taxes  when due shall subject the taxpayer to a liability for               
interest at the rate of 0.5 percent for each day thereafter.                    
                                                                                
      Article 32.If a false tax return is filed, the total sum of               
underpayment  and   a  penalty   equal  to  200  percent  of  the               
understated income shall be recovered without suing for claims.                 
                                                                                
                                                                                
                            Chapter 5                                           
                                                                                
               Taxation of Miscellaneous Receipts                               
                                                                                
     Article 33.Gross income generated from the rent of property,               
and income  derived from  interest on  credit as  well  as  other               
receipts not indicated in Chapter 2,                                            
3 and  4 of  this law  shall be  subject to  a 20 percent rate of               
income tax.                                                                     
                                                                                
       Article  34.Taxes on miscellaneous receipts of persons are               
levied by  the State Tax Inspectorate of their permanent place of               
residence.   Tax levied  on interest  paid by credit institutions               
for deposits  of natural  persons is  calculated and  paid to the               
                                                                                
budget  by   credit  institutions   according  to  the  procedure               
established by the Ministry of Finance.                                         
                                                                                
     Article 35.Income Tax is not deducted:                                     
                                                                                
     (1)  income derived from blood-donations;                                  
       (2)   income  received by  legacy  and  gift  (except  the               
inherited royalty)  the taxation  of which  is regulated by other               
standard acts;                                                                  
     (3)  recovered alimony;                                                    
       (4)   sums  received as  compensations for loaning a bread               
winner or capacity to work;                                                     
       (5)   sums  received as compensation, the rate of which is               
established by  the existing  laws on  labor, for  business  trip               
expenses, and  for material  and moral damages, and not exceeding               
the amount fixed;                                                               
       (6)   sums  paid out  for bonds  issued by  state or local               
government;                                                                     
     (7)  lottery winnings;                                                     
     (8)  dividends on shares;                                                  
     (9)  sums received from compulsory and voluntary insurance;                
     (10) refunds for shares and sums for sold shares;                          
       (11)  gains from sale of personal property excluding self-               
made commodities meant for sale.                                                
                                                                                
     Article 36.Income tax is assessed in the following manner:                 
                                                                                
       (1)  income tax for the current year is computed according               
to the  income return  filed by the taxpayer.  In such cases when               
the amount  of income  earned has changed considerably during the               
taxable year, the income tax can be reassessed;                                 
     (2)  following the close of the year or upon the loss of the               
source of  income, the  tax is reassessed taking into account the               
factual amount  of income  earned.   The difference  between  the               
amount of  tax paid and the amount due is sought and recovered or               
refunded within  a month  and in  case of  loss of  the source of               
income, within 15 days from the day that it was filed.                          
                                                                                
     Article 37.Assessment of the tax is based on:                              
                                                                                
     (1)  a return filed with the State Tax Inspectorate prior to               
January 15 by a taxpayer receiving miscellaneous remuneration.                  
                                                                                
      Returns from income earned within a one-year period must be               
filed within 5 days after the first month that income is received               
and within  5 days  after the loss of employment for which income               
has been received;                                                              
                                                                                
      (2)  the investigation results carried out by the State Tax               
Inspectorate and  other  material  hearing  upon  the  income  of               
taxpayers.                                                                      
                                                                                
       Article  38.If the tax was not collected from the taxpayer               
when due,  it can be collected for the period not exceeding the 2               
preceding years.   Amendments  to returns  and refunds  of  taxes               
erroneously paid,  are  permissible  only  with  respect  to  the               
preceding 2 years.                                                              
                                                                                
       Article 39.If the taxpayer has failed to pay tax when due,               
interest at the rate of 0.5 percent per day thereafter is imposed               
on the amount due.                                                              
                                                                                
       Article 40.If gross income is understated in the turn, the               
total sum of underpayment, plus a penalty equal to 200 percent of               
the underpayment, is recoverable without suit.                                  
                                                                                
      Article 41.Enterprises, institutions and organizations must               
provide  the   State  Tax   Inspectorate  with   the  information               
pertaining to  the sums  of money paid to individuals not related               
with labor  relations (property rent and others).  Within 10 days               
from the  date the  money was  paid out, this information must be               
submitted to  that State  Tax Inspectorate on whose territory the               
person receiving the income permanently resides.                                
                                                                                
       If  an enterprise,  institution or  organization fails  to               
submit information  by the  fixed date,  it shall be subject to a               
penalty at the rate of 0.5% percent per day but not exceeding 300               
percent of the amount paid over.                                                
                                                                                
 Vytautas  Landsbergis  President  Supreme  Council  Republic  of               
Lithuania                                                                       
                                                                                
XX October 1990 No. I-641                                                       
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
                                                                                
        PROVISIONAL LAW ON INCOME TAX ON NATURAL PERSONS                        
                                                                                
                          SUPPLEMENT 1                                          
                                                                                
       Rates  of income  tax applied  in computing tax charged on               
taxable income  earned at  principal job and connected with labor               
relations:                                                                      
                                                                                
      Amount of taxable income      Rate of tax                                 
      per month                                                                 
                                                                                
      from 1 to 600 Rb              18%                                         
                                                                                
      from 601 to 900 Rb            108 Rb + 20% of the sum                     
                                    in excess of 600 Rb                         
                                                                                
      from 901 to 1400 Rb           168 Rb + 24% of the sum                     
                                    in excess of 900 Rb                         
                                                                                
      from 1001 to 1900 Rb          288 Rb + 28% of the sum                     
                                    in excess of 1400 Rb                        
                                                                                
      in excess of 1900 Rb          428 Rb + 33% of the sum                     
                                                                                
                                                                                
                                                                                
        PROVISIONAL LAW ON INCOME TAX OF NATURAL PERSONS                        
                                                                                
                          SUPPLEMENT 2                                          
                                                                                
                                                                                
             Rates of Income Tax used in computing tax charged on               
taxable income  earned at  extra job  and  connected  with  labor               
relations:                                                                      
                                                                                
      Amount of income per month    Rate of tax                                 
      up to 200 Rb                  18%                                         
                                                                                
      from 201 to 700 Rb            36 Rb + 20% of the sum                      
                                    inexcess of 200 Rb                          
                                                                                
      from 701 to 1000 Rb           136 Rb + 25% of the sum                     
                                    in excess of 700 Rb                         
                                                                                
      from 1001 to 1500 Rb          211 Rb + 30% of the sum                     
                                    in excess of 1000 Rb                        
                                                                                
      from 1501 and more            361 Rb + 35% of the sum                     
                                    in excess of 1500 Rb                        
                                                                                
                                                                                
                                                                                
         RESOLUTION ON THE PROVISIONAL LAW ON INCOME TAX                        
                                                                                
               OF NATURAL PERSONS ENTRY INTO FORCE                              
                                                                                
               The Supreme  Council of  the Republic of Lithuania               
resolves:                                                                       
                                                                                
               1.   To establish, that the Law of the Republic of               
Lithuania on  Income Tax of Natural Persons comes into force with               
the imposition  of income  tax upon income earned after 1 January               
1991, and is valid until 31 December 1991.                                      
                                                                                
            2.   To establish that, until the legislative acts of               
the Republic  of Lithuania  are coordinated  with the Provisional               
Law of  the Republic  of  Lithuania  on  Income  Tax  of  Natural               
Persons, those  parts of legislative acts which do not contradict               
this law are valid.                                                             
                                                                                
             3.   To commission the government of the Republic of               
Lithuania by  1 January 1991 to arrange and submit to the Supreme               
Council for consideration:                                                      
                                                                                
           3.1  Regulations on the imposition of tax on income of               
natural persons received in foreign currency.                                   
                                                                                
              3.2  Regulations on the assessment of income tax of               
natural persons, taking into account inflation.                                 
                                                                                
             4.   To commission the Government of the Republic of               
Lithuania to establish by 1 January 1991 regulations on computing               
the value of income received in kind.                                           
                                                                                
          5.   To commission the Ministry of Finance to establish               
by 1 January 1991:                                                              
                                                                                
               5.1   Regulations on refunding to the State Budget               
revenues not received due to the income tax deductions allowed by               
self-governments to natural persons;                                            
                                                                                
               5.2   The form of the license, and regulations for               
obtaining same, for private enterprises ad partnership having the               
rights of natural persons;                                                      
                                                                                
               5.3   The form  of income  tax return  for private               
enterprises and  partnerships possessing  the rights  of  natural               
persons, and  regulations for filling it in, including accounting               
regulations.                                                                    
                                                                                
          6.   To establish that interest paid to natural persons               
by credit  institutions on  their deposits  is not  taxable if it               
does not exceed 4 percent per year.                                             
                                                                                
          7. The  taxable income  earned in  1991 by partnerships               
engaged in  agricultural production  is subject  to tax rate of 5               
percent in  lieu of 10 percent tax rate established under Article               
24 of this law.                                                                 
                                                                                
               8. To  establish that tax-exempt minimum of income               
earned in 1991 by taxpayers indicated in Section (6) of Article 5               
of this law is 200 Rb.                                                          
                                                                                
 Bronius Kuzmickas                                                              
                                                                                
Vice President Supreme Council Republic of Lithuania                            
                                                                                
9 October 1990 No. I-644