REPUBLIC OF LITHUANIA                                     
                                                                                
                               LAW                                              
                                                                                
                      ON SMALL ENTERPRISES                                      
                                                                                
     Article 1. Objectives of the Law                                           
                                                                                
     This law shall establish the basic principles of stimulating               
the activities of small enterprises.                                            
     Small enterprises  shall function  in pursuance  of all  the               
laws regulating the activities of enterprises, with the exception               
of specific requirements provided for in this Law.                              
                                                                                
This law  shall not  apply to  state enterprises  and state stock               
companies, as  well as  to the  activities specified  in the list               
approved by the Government of the Republic of Lithuania which are               
not liable to be stimulated.                                                    
                                                                                
     Article 2. Definition of Small Enterprise                                  
                                                                                
     A small  enterprise shall  be an  enterprise with  the total               
number of employees not in excess of 100.                                       
                                                                                
     Article 3. Tax Reliefs                                                     
                                                                                
     For the  period of  two years  from the  entry into force of               
this Law  or from  the founding  of a new enterprise, the rate of               
tax on profits imposed on small enterprises with rights of  legal               
persons as  prescribed by  the Law  on Taxes  on Profits of Legal               
Persons, and  the rate of income tax imposed on small enterprises               
with rights  of natural  persons as prescribed by the Provisional               
Law on  Income Tax  of Natural  Persons shall  be reduced  by  70               
percent, and,  beginning with  the third  year,   by 50  percent,               
provided the  total number  of   employees in said enterprises is               
not in  excess of  50, and  the income  received from  productive               
activity amounts  to not  less  than  two-thirds  of  all  income               
generated from the sale of goods and services.                                  
                                                                                
     For small  enterprises whose income received from productive               
activity amounts  to less than two-thirds of all income generated               
from the  sale of  goods and  services, said  tax rates  shall be               
reduced by 50 percent.                                                          
                                                                                
     In accordance with the norms specified herein, income tax of               
natural persons  shall be  levied on  the portion  of profits  of               
operating small enterprises which is allocated for the payment of               
bonuses or  other incentives; upon computing taxable profit, said               
amounts shall be deducted from balance profit.                                  
                                                                                
     Upon  computing   taxable  profit  or  taxable  income,  all               
expenditures and  investments  related  to  scientific  research,               
design and  construction work, and introduction of new technology               
shall be deducted from gross income.                                            
                                                                                
     Article 4. Tax Credit                                                      
                                                                                
     The payment  of taxes on profits (income) prescribed by law,               
for small enterprises with the number of employees from 51 to 100               
whose income  from productive  activity amounts  to not less than               
two-thirds of  all income  generated from  the sale  of goods and               
services, shall  be deferred  (tax credit shall be given) for not               
longer than three years.                                                        
     For other  small enterprises  with the  number of  employees               
specified above,  the payment  of taxes on profits (income) shall               
be deferred for one year.                                                       
                                                                                
     An enterprise  which has  repaid not less than 50 percent of               
the given  tax credit  shall be  entitled to  a tax credit in the               
ensuing period.                                                                 
                                                                                
     Article 5. Privileges for the Crediting Party                              
                                                                                
     Enterprises and  banks of  all types of ownership which give               
credit to  small enterprises  on easy terms, are entitled to a 30               
percent reduction of the rate of tax on profits (income) equal to               
the amount of the credit given.                                                 
                                                                                
     Article 6.                                                                 
                                                                                
     A simplified  procedure of  accounting of and accountability               
for the  results of their productive activity shall be applied to               
small enterprises.  The procedure  shall be  established  by  the               
Ministry of Finance of the Republic of Lithuania.                               
                                                                                
Vytautas Landsbergis                                                            
President                                                                       
Supreme Council                                                                 
Republic of Lithuania                                                           
Vilnius                                                                         
20 December 1992                                                                
No. I-2125