REPUBLIC OF LITHUANIA                                     
                               LAW                                              
                                                                                
              ON TAXES ON PROFITS OF LEGAL PERSONS                              
                                                                                
                  (as amended by 13 July 1993)                                  
                                                                                
                                                                                
                                                                                
            1.  Taxable Entities and Taxable Objects                            
                                                                                
                                                                                
     Article 1.  A profit tax shall be imposed on:                              
     (a) enterprises with rights of legal persons, the activities               
whereof are  regulated  by  the  Republic  of  Lithuania  Law  on               
Enterprises, and                                                                
     (b) legal  persons engaged  in non-profit  activity, to  the               
extent said   income  shall be  received from commercial-economic               
activity, with  the   exception  of  non-budgetary  resources  of               
institutions whose  expenditures   are fully  reimbursed  by  the               
State from the State Budget. (Amended  11 May 1993)                             
                                                                                
     Article 2.   A profit tax shall be imposed on taxable profit               
computed according  to the procedure defined in Chapter 2 of this               
Law.                                                                            
                                                                                
                                                                                
                2.  Definition of Taxable Profit                                
                                                                                
                                                                                
                                                                                
     Article 3.   The  total of  sales revenue  and non-operating               
revenues   (hereinafter -  gross revenue)  shall  constitute  the               
basis for computing  the amount of the taxable profit.                          
     Sales revenue  shall comprise income generated from the sale               
of goods   and  services and  other assets (with the exception of               
profit received   from  the exploitation  of fixed  assets for no               
less than  one year),   compensation,  and income  generated from               
renting assets.                                                                 
     Non-operating revenues  shall constitute  payments  received               
from economic   sanctions  and other  income not  related to  the               
production and sale  of goods and services.                                     
     While computing  taxable profit,  the following income shall               
be eliminated  from non-operating revenues:                                     
     1) dividends and interest income received on bonds;                        
     2) the  share of  profit received by shareholders from other               
enterprises;                                                                    
     3) compensation  for insured  assets received from insurance               
organisations;                                                                  
     4) the  share of  income (profit)  received by founders from               
individual  (personal) enterprises or from partnerships; (Amended               
11 May 1993)  and                                                               
     5) sums  received for  charity and  sponsorship regulated by               
the Republic   of  Lithuania  Law  on  Charity  and  Sponsorship.               
(Amended 13 July 1993)                                                          
                                                                                
                                                                                
     Article 4.  Profit shall be computed by deducting from gross               
revenue the  production and  distribution costs  related to goods               
and  services sold as specified in Article 5.                                   
     Taxable profit  shall be  computed by  deducting from profit               
amounts  not liable to tax, as set forth in Article 6.                          
     Taxable  profit  of  legal  persons  engaged  in  non-profit               
activity shall  consist of the difference between income received               
from paid  activities   and expenditures  on  administering  said               
activities. (Amended 11 May  1993)                                              
                                                                                
     Article 5.   When  computing taxable  profit, the  following               
actual   production and  distribution costs,  as well as expenses               
related to   the goods sold, shall be deducted from gross revenue               
of an enterprise:                                                               
     (1) material  expenditures and other comparable expenditure,               
including  business trip expenses;                                              
     (2) depreciation  charges providing  for the  replacement of               
fixed assets, but not exceeding tax rates;                                      
     (3) labor costs;                                                           
     (4) social insurance contributions;                                        
     (5) compulsory  insurance contributions,  with the exception               
of insurance   contributions for the state capital accumulated in               
the enterprise;                                                                 
     (6) tax on State natural resources, licence fees (Amended 13               
July   1993) and pollution tax, but not exceeding the established               
rates and  limits, and land and value-added taxes; and                          
     (7) interest on bank credits and land rent;                                
     (8) Repealed 13 July 1993.                                                 
     When computing  taxable profit,  only actual  production and               
circulation   costs confirmed  by legal  documents  having  legal               
force and  the expenses   of  an enterprise  specified  in  Par.1               
hereof shall be deducted from  gross revenue.                                   
     Importation of material assets from abroad must be confirmed               
by customs  declarations.(Amended 11 May 1993)                                  
                                                                                
     Article 6.  When computing taxable profit, the entire amount               
of the  actual expenses  of those  charitable  organisations  and               
funds,   societies and  unions of  the disabled  as well as their               
enterprises  which are specified in the Republic of Lithuania Law               
on Charity  and   Sponsorship and  which expenses  are related to               
charitable and  sponsorship    affairs  shall  be  deducted  from               
taxable profit  computed in  accordance   with the  procedure set               
forth in  Article 4  of this  Law provided  said    expenses  are               
confirmed by legally enforceable documents.                                     
     When computing  taxable profit of charity donors or sponsors               
who are   not  specified in  Par.1 hereof,  the  actual  expenses               
related to  charitable   and sponsorship affairs and confirmed by               
legally  enforceable  documents  shall  be  twice  deducted  from               
taxable profit  computed in  the manner  established in Article 4               
of this  Law; the  deducted amount,  however,  must not exceed 40               
percent of  taxable profit.  Sums allocated  for charitable   and               
sponsorship affairs  which are in excess of 40 percent of taxable               
profit shall be liable for taxation in the general manner.                      
     The procedure established in this Article shall not apply to               
charity   dispensed or  financial support  given to foreign legal               
persons with   the  exception  of  cases  when  such  charity  is               
dispensed or  financial   support is  given through international               
charitable  organisations  or    Lithuanian  communities  located               
abroad. (Amended 13 July 1993)                                                  
                                                                                
                                                                                
                          3. Tax Rates                                          
                                                                                
                                                                                
     Article 7.  The tax rate shall be:                                         
                                                                                
     1) 10  percent of the portion of taxable profit appropriated               
for capital  investments.                                                       
     Capital investment  shall be acquisition of fixed assets for               
long-term   use (buildings,  structures, machinery, technological               
equipment and   other fixed assets) and non-material property for               
long-term use ( technological licences, patents, and trade marks)               
as well as expenses  related to unfinished construction work; and               
     2) 29  percent of  other taxable profit. (Amended 6 February               
1992 and  11 May 1993)                                                          
     The Government  of the  Republic of  Lithuania may fix lower               
tax rates  on taxable profits in the branches of economy that are               
given priority.  (Amended 30 May 1991)                                          
                                                                                
                                                                                
                                                                                
                         4. Tax Reliefs                                         
                                                                                
                                                                                
     Article 8.   The  rate  of  profit  tax  for  legal  persons               
producing   agricultural products and for specialised enterprises               
providing services   for  agriculture shall  be 10 percent of the               
taxable profit.                                                                 
     If the  portion of  income from  agricultural  products  and               
services provided   for  agriculture is  less than  60 percent of               
sales revenue,  all profit   shall  be subject to taxation at the               
rate provided in Article 7 of  this Law.                                        
     The tax  rate for  creative unions  (unions  of  architects,               
artists,  designers,    photographers,  composers,  film  makers,               
scientists, writers, folk artists,  theater actors and directors,               
and journalists)  as well  as their  companies  and organisations               
which allocate at least 29 percent of their profit  for financing               
the needs  of creative unions, shall be 5 percent of  the taxable               
profit. (Amended 27 June 1991 and 11 May 1993)                                  
                                                                                
      Article  9.   Enterprises which  receive sales revenue only               
for   their own  products and  which employ handicapped employees               
shall be   entitled  to the  following  deductions  in  computing               
taxable profit:  (Amended 11 May 1993)                                          
                                                                                
     Proportion of Handicapped          Deduction of Taxable                    
          Employees                          Profit                             
                                                                                
                                                                                
          Over 50%                           100%                               
          40-50%                             75%                                
          30-40%                             50%                                
          20-30%                             25%                                
                                                                                
                                                                                
                                                                                
     The  categories   of  individuals  to  whom  the  status  of               
handicapped employees   is applicable and the method of computing               
their proportion  to the   total  number of employees, as well as               
regulations elaborating  on the   application  of such tax relief               
shall be  established by  the Government    of  the  Republic  of               
Lithuania.                                                                      
                                                                                
     Article 10.   Local  government Councils  may allow  certain               
persons   tax deductions  or exempt  them from  profit tax  for a               
specified period  of time; however, the sums due shall be payable               
from the  budgets of  the local governments.  Rules regarding the               
means  by  which  deficiencies    in  State  Budget  revenue  are               
satisfied shall be established by the  Ministry of Finance of the               
Republic of Lithuania.                                                          
     If a taxpayer under the Laws of the Republic of Lithuania is               
entitled   to several  tax reliefs,  only the  biggest tax relief               
shall be granted.  (Amended 11 May 1993)                                        
                                                                                
                                                                                
                5. Computation and Payment of Tax                               
                                                                                
                                                                                
     Article 11.   The Taxable Entity shall compute the amount of               
the tax  and pay  the amount  due to  the appropriate  budget, as               
provided  by the Law on Budgeting of the Republic of Lithuania.                 
     Legal persons  having structural units on the territories of               
other  local governments ("subsidiaries") shall pay at the end of               
the appropriate  period the amount of the tax due to be paid into               
the budgets of the  local governments in proportion to the number               
of  employees  in  the    subsidiaries  located  on  the  various               
territories of  those governments.  The  tax shall be paid in the               
prescribed manner  only in  cases where  more  than 20 people are               
employed in subsidiaries.                                                       
                                                                                
     Article 12.  Payment for given taxable year shall be made in               
installments, in  advance, and  the amount of a given installment               
shall  be computed by applying the installment rate.                            
     The installment  rate   shall be  computed by  dividing  the               
total amount  of the  profit tax  paid  for the preceding taxable               
year by  the  amount  of  sales  revenue  received    during  the               
preceding taxable year.                                                         
     The installment  rate shall  be computed  from  an  estimate               
submitted  by   the  taxable   entity  in  conjunction  with  the               
appropriate  State  Tax  Inspectorate,  in  accordance  with  the               
procedure established by the  Ministry of Finance.                              
     The amount of advance payments shall be computed by applying               
the installment   rate  to the  actual sales revenue. The taxable               
entity shall deposit  estimated payments 3 times a month into the               
appropriate budget  by   the date  specified and  in  the  manner               
established by the Ministry of  Finance.                                        
     For estimating  advance payments  for the  period up  to the               
10th day   of  February of the upcoming taxable year or up to the               
date specified   by  the State  Tax Inspectorate, the installment               
rate applied in the  preceding taxable year shall be used.                      
                                                                                
     Article 13.  Taxable entities  that receive  a consideration               
portion of income by means other than through banks shall deposit               
advance payments  in accordance  with the  procedure  coordinated               
with  the appropriate State Tax Inspectorates.                                  
                                                                                
     Article 14.   Following  the close  of each calendar quarter               
and   on or before the 15th day of the month of the next calendar               
quarter,   and following  the close of the taxable year, that is,               
on or  before   the 1st  day of February of the following taxable               
year, taxable entities  shall file with the appropriate State tax               
inspectorates  and   their     departments  financial  statements               
established by  the Republic  of Lithuania  Law on the Principles               
of Accounting and a profit tax return. (Amended  11 May 1993) The               
form of  the return  and the information contained  thereon shall               
be established by the Ministry of Finance.                                      
     If the  amount of tax shown on the return exceeds the amount               
paid during   the  taxable year, the taxable entity shall, within               
10 days  from the  due date for the filing of the return, deposit               
the additional estimated  sum required into the budget prescribed               
by the Law on Budgeting of  the Republic of Lithuania.                          
     Any excess  estimated amount  paid in  advance   shall, with               
taxable entity's consent, be either refunded or credited  against               
taxes subsequently due and payable.                                             
                                                                                
                                                                                
                                                                                
        6.  Responsibility for Correct Computation of the                       
               Amount  and  Payment of Profit Tax                               
                                                                                
                                                                                
                                                                                
     Article 15.  The taxable  entity shall  be held  responsible               
for correct computing of the amount of the profit tax.                          
     If the  taxable profit and profit tax are understated on the               
tax return,   the  amount of  tax due for the understated profit,               
plus a  penalty equal   to  200 percent of the computed amount of               
tax due  for the  understated  profit shall be recovered into the               
appropriate budget  prescribed by   the  Law on  Budgeting of the               
Republic of Lithuania.                                                          
     The amount of the tax due for the understated profit and the               
penalty   shall be  paid within  5 days  after such  violation is               
established. (Amended  11 May 1993)                                             
                                                                                
     Article 16.   The  taxable entity  shall be held responsible               
for   paying the  profit tax by the due date.  Failure to pay the               
taxes required   under  this Law shall subject the taxable entity               
to liability  for interest   at  the rate  of 0.5  percent on the               
principal amount  due for  each day  that the tax remains unpaid.               
Payments into  the budget  not deposited   on the date prescribed               
therefor shall  be recoverable  by the  State   Tax  Inspectorate               
without suit.                                                                   
                                                                                
     Article  17.   Officers  of  the  taxable  entity  shall  be               
personally     responsible  for   furnishing  false   information               
resulting in  an erroneous   assessment of the tax due, and shall               
be subject  to  liability  in  accordance    with  the  procedure               
established by law.                                                             
                                                                                
                                                                                
                                                                                
VYTAUTAS LANDSBERGIS                                                            
President                                                                       
Supreme Council                                                                 
Republic of Lithuania                                                           
                                                                                
                                                                                
Vilnius                                                                         
31 July 1990                                                                    
No. I-442