REPUBLIC OF LITHUANIA
LAW
ON
VALUE-ADDED TAX
I. The Object of Tax
Article 1. The object of value-added tax (hereinafter
referred to as VAT) shall be the value added to the product and
services at each stage of production, distribution and sales, as
well as imported goods.
Article 2. A good, as the object of tax, shall include
things, coins meant for numismatics, real property (with the
exception of land), and energy of all types.
Article 3. Services, as the object of the tax, shall include
services of all types and other activities provided for a
consideration of money, excluding those provided by the employees
to their employers under employment contract.
Article 4. The following goods and services shall be exempt
from VAT:
1) medical and dental services, medicines, medical goods and
medical equipment;
2) social services rendered by day care centers and homes
for invalids and the elderly;
3) educational, scientific and cultural services rendered by
institutions of education, science and studies, as well as non-
profit cultural institutions;
4) services of route passenger transport;
5) postal services (with the exception of transmission of
parcels and telecommunication services, as well as postal stamps
and envelopes meant for collecting);
6) insurance and banking services (excluding storage
facility services) and turnover of securities;
7) coffins, wreaths, temporary tombstones, and funeral
services;
8) publishing, printing and circulation of newspapers,
magazines and books;
9) services and works for which taxes are paid into the
budget;
10) goods and services rendered to foreign diplomatic and
consular missions and international organisations;
11) state-owned property subject to privatization;
12) works and services paid for with donated funds;
13) rent for houses and apartments being leased for more
than 2 months;
14) land rent; and
15) articles of traditional art.
II. Payers of VAT
Article 5. VAT shall be calculated and paid into the budget
by: legal persons, enterprises without the rights of a legal
person, sub-units of foreign economic entities operating in the
Republic of Lithuania, and natural persons.
Article 6. Persons whose receipt from the sale of goods and
services (not including the sale of long-term assets which were
used for more than one year) are, excluding VAT, not in excess of
5,000 litas, shall not calculate and pay VAT into the budget. VAT
paid by these persons for acquired goods or obtained services
shall not be repaid.
Persons whose income is specified in part 1 of this Article
shall, if said income is between 5,000 and 15,000 litas per
year, be entitled, if they wish, to be payers of this tax.
If the annual receipts of these persons from the sale of
goods and services are in excess of 15,000 litas, they shall be
required to calculate and pay VAT into the budget according to
the general procedure, starting from the month when the receipts
exceeded the designated amount.
Article 7. Persons who under the provisions of Article 6 are
payers of VAT must register with the State Tax Inspectorate as
payers of VAT.
Newly established companies, institutions and organisations
which expect that their sales proceeds shall exceed the sum
specified in Article 6, must register with the State Tax
Inspectorate at least 10 days prior to the commencement of the
activities.
Article 8. Persons who are not payers of VAT shall not have
the right to charge this tax to their customers. If said persons
do charge this tax, they must transfer it into the budget.
III. Taxable Value and Time for Computation
Article 9. The taxable value of goods and services shall
consist of:
1) the production cost of goods and the rendering price of
services;
2) expenses for packaging, transportation, insurance and the
like;
3) payments for the installation of equipment;
4) payments for mediation, commission and auction charges;
5) various discounts and additional charges not entered in
the invoice;
6) expenses for the purchase or sale of goods on credit;
7) various taxes related with the sale of goods (customs
duties, excise duties), excluding VAT; and
8) service expenses or other sums not included in the
production cost of goods or rendering of services, which the
customer pays to the seller of goods or services.
Article 10. The taxable price of goods imported into the
Republic of Lithuania shall be determined according to the same
procedure as for assessing customs duty (customs duty shall also
be included therein).
Article 11. While exchanging goods (or services) the taxable
price shall be the price of exchanged goods or services.
Article 12. VAT on goods and services shall be computed:
when the seller (supplier of services) issues an invoice or
other document to the customer for the goods sold (services
rendered);
upon paying the money at the cash desk, when goods (or
services) are paid for in cash and an invoice is not issued;
upon presenting the goods declaration when said goods are
imported.
IV. Tax Rates
Article 13. VAT shall be charged at a rate of:
1) 0% - for exported goods and services; or
2) 18% - for all goods and services with the exception of
those referred to in Articles 4 and 38 of this Law and in item 1
hereof.
Article 14. VAT shall be computed by applying an 18% tax
rate when charging it on the taxable value of goods sold or
imported (or services rendered), or a 15.25% tax rate when
charging it on the value of goods and services including VAT.
V. Computation of the Tax
Article 15. Upon expiration of the tax period, the payers of
VAT must transfer into the budget the difference between the
computed sum of VAT for goods sold and services rendered and the
deductible sum of VAT.
Article 16. The deductible sum of VAT shall include the
sum of VAT recorded in in the accounts for goods delivered by the
suppliers and services rendered and the sum of VAT paid for
imported goods, with the exception of cases specified in Article
19 of this Law.
Article 17. If during the tax period the deductible sum of
VAT was in excess of the computed sum of VAT for goods sold or
services rendered, the difference shall be deducted from the
computed sum of VAT for goods sold and services rendered in later
tax periods. The sum of Vat recorded in in the accounts for
acquired long-term assets meant for production shall be deducted
from the sum of VAT assessed by the owner for goods sold and
services rendered in that tax period in which these assets were
used for the production of goods subject to VAT or exportable
goods or for rendering services subject to VAT, taking into
account the provisions of Article 20, irrespective of the sum of
VAT levied on the goods sold. If the purpose of long-term
property for production is later changed and therefore the right
to deduct VAT is terminated, the deductible sum of VAT shall be
adjusted according to the procedure established by the Government
of the Republic of Lithuania, although no more than 10 years must
elapse from the deduction of VAT from real property, and 5 years
from other long-term property.
The sum of VAT recorded in in the accounts for exported
goods shall be deducted while computing VAT for that tax period
during which these goods were exported, irrespective of the sum
that was computed for the goods sold or services rendered.
Article 18. It shall be permitted to deduct sums of VAT
which must be paid by other taxpayers only if such sums are
indicated separately in the invoice. Sums of VAT paid for
imported goods may be deducted only if there is a special mark of
the customs office in the import documentation evidencing the
payment of tax.
The payer of VAT may calculate and deduct the tax according
to the procedure established by the Government of the Republic of
Lithuania for goods acquired in retail trade enterprises, but not
in excess of 2,000 litas per year.
Upon selling purchased second-hand items, special shops may,
according to the procedure established by the Government of the
Republic of Lithuania, calculate and deduct VAT according to the
price of the purchased items.
Article 19. VAT recorded in the accounts for goods and
services shall not be deducted from the sum of VAT due for the
goods sold and services rendered, if such goods or services have
been used:
1) for production of goods or rendering of services which
are not subject to VAT (specified in Articles 4 and 38 of this
Law);
2) for catering of the employees of the taxpayer;
3) for payment in kind for work done by the employees of the
taxpayer;
4) for the maintenance of day care centers, rehabilitation
centres, accommodations, holiday homes, or summer camps used for
the needs of the employees of the taxpayer;
5) for gifts, representation, and various entertainment;
6) for the exploitation of passenger vehicles with a seating
capacity not exceeding 10 passengers excluding the driver,
provided that said exploitation is not related with the carriage
of passengers for a fee and is not chargeable with VAT.
Article 20. If the taxpayer produces both taxable and non-
taxable (VAT) goods (renders services), recorded in the accounts
sum of VAT payable to suppliers during the tax period for goods
and services (except those specified in Article 19) shall be
deducted in proportion to the value of taxable and non-taxable
goods (the value of the supplied services) delivered to the
purchasers within that period.
The Government of the Republic of Lithuania may establish a
different procedure for deducting VAT in cases provided for in
this Article.
Article 21. Paid VAT shall be repaid to:
1) foreign nationals who have acquired more goods at special
shops than are permitted by the Government of the Republic of
Lithuania to bring into the Republic of Lithuania duty free and
who took them out of the Republic of Lithuania;
2) officers of foreign diplomatic and consular missions and
members of their families (on a parity basis) as well as officers
of international organisations and members of their families for
goods acquired for personal consumption, or for services
obtained.
VI. Taxation of Imports and Exports
Article 22. VAT shall be levied on imports at the rate
established in item 2 of Article 13, which shall be paid into the
budget according to the procedure established for the payment of
customs duty.
Article 23. The following imported goods shall be exempt
from VAT:
1) goods imported as charity or humanitarian relief;
2) goods paid for with the funds of foreign states,
international organisations and foundations;
3) goods brought in by natural persons, if their number does
not exceed the designated number of goods permitted by the
Government of the Republic of Lithuania to be imported free of
duty.
Article 24. The value of imported goods shall be assessed by
taking into consideration the provisions of Article 10 of this
Law and the Law on Customs Tariffs of the Republic of Lithuania.
The Government of the Republic of Lithuania may postpone the
payment of VAT for imported long-term production assets, with the
exception of means of transportation.
Article 25. Zero-rating provided for in Article 13 of this
Law shall apply to the following goods:
1) exported goods;
2) goods, works and services relative to the carriage,
loading, unloading of exported goods, and the transit of foreign
cargo through the Republic of Lithuania;
3) provision, completion, repair, exploitation and rent of
aircraft and ships which carry goods and passengers on
international routes;
4) goods brought into customs warehouses and shops which are
located outside the customs territory of the Republic of
Lithuania;
5) services performed by the taxpayers -- enterprises,
institutions and organisations -- beyond the boundaries of the
Republic of Lithuania.
VII. Value- Added Tax Accounting
Article 26. Customers must be issued invoices of goods
dispatched and services rendered to them. The invoice must
contain mandatory requisites provided for in Article 10 of the
Law on the Principles of Accounting and the code of the payer.
Article 27. If after the issue of an invoice the prices of
goods or their amount have been changed, a new invoice must be
issued.
Article 28. If the issued invoices do not comply with the
requirements of Article 26 and 27 of this Law, sums of VAT
payable to suppliers according to these invoices shall not be
deducted when calculating the sum of VAT payable into the budget.
Article 29. If the payer has calculated and included VAT for
goods and services in the invoice which pursuant to this Law are
outside the scope of VAT, said payer must pay this VAT into the
budget according to the established procedure.
Article 30. The payers of VAT must keep a separate record of
purchase and sale of taxable goods and services, according to
which VAT shall be assessed.
VIII. Procedure for Payment of VAT into the Budget
Article 31. The tax period of VAT shall be a calendar month.
The Government of the Republic of Lithuania may establish the
period of and procedure for advance payment of VAT.
Article 32. Upon the expiration of the due date of payment,
each taxpayer must, before the 15th day of the next month, file
with the State Tax Inspectorate a declaration of the computed and
deductible sum of VAT.
Article 33. If a taxpayer fails to file a declaration when
due, the State Tax Inspectorate shall increase the sum of VAT due
during that tax period by 1%, which shall be recovered into the
budget.
Article 34. If a taxpayer fails to file a declaration within
5 days after the expiration of the due date, the State Tax
Inspectorate shall, without suit, recover into the budget the sum
of tax showed on the declaration for the previous month,
increased temporarily by 10% until the declaration is filed.
Article 35. The computed sum of VAT must be paid into the
budget within 10 days from the date prescribed by Article 32 of
this Law for filing the declaration. Upon failure to pay VAT in
due time, the unpaid tax shall bear interest at the rate of
0.5% for each day thereafter, including the day on which the
tax was paid into the budget. The unpaid VAT shall be recovered
for the current year and 5 preceding years.
IX. Control of Tax and Economic Sanctions
Article 36. If during the examination it is determined that
the taxpayer showed in the declaration an amount of tax less than
the correct sum of VAT or has deducted too much of and therefore
paid too little into the budget, said taxpayer must pay the
assessed deficiency and the penalty in an amount equal to the
deficiency into the budget within 5 days after the date of the
determination of default.
The State Tax Inspectorates shall recover sums of taxes and
penalties from enterprises, institutions and organisations
without suit and from natural persons in court.
X. Final Provisions
Article 37. This Law shall come into effect on 1 May, 1994.
Article 38. Upon the consent of the taxpayers, the following
goods and services shall, until January 1, 1995, not be charged
with VAT::
1) gas, water, electricity, thermal power, sewage and other
public utilities supplied to residential houses;
2) home-produced food stuffs sold to the consumers and trade
companies which were not subject to excise tax until the
introduction of VAT.
The Government of the Republic of Lithuania has therefore
established a provisional procedure for trade companies for the
calculation and payment of VAT which shall be valid until January
1, 1995.
Upon the consent of VAT payers, organizations supplying
services, and construction and design of residential houses,
including the construction of engineering networks and
territorial management, shall be exempt from VAT until January 1,
1996.
Article 39. The Government of the Republic of Lithuania
shall, by 1 March 1994, establish:
1) lists of goods and services for which VAT shall not be
calculated;
2) the procedure for the registration of the payers of VAT;
3) the procedure for adjustment of sums deductible for
acquired long-term production assets if they are used for other
purposes;
4) the procedure for deducting VAT for goods acquired from
retail trade and second-hand goods purchased by special shops;
5) the procedure for repayment of VAT -
for foreign nationals, for goods bought at special shops
and exported from the Republic of Lithuania;
for officers of foreign diplomatic and consular missions and
their family members, for goods acquired for personal consumption
and for services obtained;
6) the procedure for the transition from turnover tax to
VAT.
Article 40. The Government of the Republic of Lithuania, on
the basis of this Law, shall, by 1 March 1994, issue instructions
for the calculation and payment of VAT.
I promulgate this Law passed by the Seimas of the Republic
of Lithuania.
ALGIRDAS BRAZAUSKAS
President
of the Republic
Vilnius
22 December 1993
No.I-345
(As amended 7 April 1994)
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