<<Go back |
Bernotas & Dominas Glimstedt
On 1st of September, 2002 the new wording of the Gaming Law has come into effect. The Gaming Law provides for the following changes:
· concrete criteria are established for gaming machines to be operated in casino;
· division of gaming machines into A and B categories determines the amount of gaming tax to be paid on gaming equipment;
· the fully paid authorized capital of the company operating category B gaming machines (comprises at least 80% of total bets) must be not less than LTL 1 mill. and in case the company operates gaming at gaming establishment (casino) not less than LTL 4 mill.;
· gaming machines may not be used for other than gaming operations.
On 4 June 2002 the Parliament has approved a new Labor Code, which comes into effect on 1 January 2003. The new Labor Code replaced eight legislative acts that had been previously regulating labor relations: Code on Labor Laws, Work Remuneration Law, Law on Collective Agreements, Law on Employment Contract, Law on Vacation, Law on Regulation of Collective Disputes, Law on Labor Dispute Resolution and Law on National Holidays. The main principles introduced by the Labor Code are the following:
· The Labor Code governs all labor relations within the territory of Lithuania irrespective of the place where working functions are intended to be performed (e.g. labor relations of a person who is providing consultation services to a foreign company are governed by the Labor Code of the Republic of Lithuania as long as a person is established in Lithuania);
· In case of conflicts of laws, the rules of an act that provides better working conditions for an employee shall prevail;
· The employer is defined as an organizational structure that has working capacity, i.e. it can undertake responsibilities arising from employment contract;
· Working council is an alternative body to professional unions for representation of employees. It consists of the representatives of employees, elected by secret ballot, and has the same competence as professional unions, unless the law confers exclusive powers on the latter (e.g. organization of strikes);
· The new labor Code introduces a new type of temporary employment contracts for short-term works. The main features of this contract include the simplified termination and absence of vacation. If an employee is willing to obtain additional work, the permission from the first employer is required;
Three main legal grounds for termination of employment contract established in the new Code have replaced eighteen grounds of termination determined by previous legislative acts. According to the new rules, an employment contract can be terminated (a) by mutual agreement of the parties; (b) on initiative of the employee (an absolute right); (c) on initiative of employer, either with or without guilt of an employee. Serious reason serves as a basis for termination in case there is no guilt of an employee. Reasons are regarded as serious if they relate to (1) qualification of an employee; (2) professional capabilities; (3) behavior in the work place and (4) any other economic, technological reasons or restructuring of the workplace. The law determines grounds, which cannot be regarded as basis for termination of employment contract by an employer, namely: membership of an employee in professional union; representation of employees; witnessing in the court proceedings against the employer; gender, sexual orientation, nationality, age and the like. An employer can terminate the employment contract without prior notice in case of gross breach of labor duties by an employee, repeated breach of labor discipline. The gross breach is understood as actions directly hindering constitutional rights of persons, disclosure of state, service, commercial, technological secrets (confidential information) or revelation thereof to a rival company; making use of his/her position for receiving illegal incomes, sexual harassment, use of alcoholic or narcotic substances, etc.
· New edition of Telecommunication Law (No. IX-1053) on 1 January 2003 will replace currently effective legislation. The new law establishes more detailed regulation of communication services and more strict supervisory mechanism.
· According to the order of Minister of Justice (No. 234, 30 August 2002) the bailiff firms will be separated from District courts from 31 January 2002. From that date the implementation procedure of courts decisions will be executed by independent bailiff firms, the projects of which will be prepared in the nearest future.
· On the mid of September 2002, the Government of the Republic of Lithuania adopted a Resolution No.1455 and 1456 on the rules on licensing wholesale and retail of tobacco products. New rules of licensing wholesale and retail of alcoholic beverages will follow. It established more simplified procedure for obtaining licenses. With regard to alcoholic beverages, only one license will be issued for the same company to trade in alcohol (retail level) in bars, restaurants and mini bars. Prior to the above regulation, licenses were required for each subdivision where alcohol was traded. In general, new rules provide for the kind of information, which has to be supplied to responsible authorities for obtaining licenses.
New Law on Income Tax on Residents (No. IX-1007 adopted on 2 July 2002) approved in July 2002 will enter into force on 1 January 2003. The Law determines the types of income which are not regarded a subject to income tax; establishes two tariff rates of 33 and 15 percent of income tax; provides for certain incomes that can be deducted from taxable amount and sets for the criteria for income to fall under class A or B, in accordance to which the income tax is paid.
A resident is defined as a permanent or temporary resident of Lithuania. The permanence is determined via the number of days within taxable period (a year) spent in the Republic of Lithuania and percentage of income received from the source in Lithuania. A temporary resident may request a tax administrator to acknowledge him/her a as permanent resident of Lithuania if his/her income from a source in Lithuania constitutes more than 90% of overall annual income irrespective of actual time spent in Lithuania.
In the terms of the Income tax Law Income means any positive income and remuneration received. The source of income may be as follows: works performed, services provided, transferred rights, sold, or in any other way transferred/ invested property or other means, as well as other benefits received in the form of money and (or) in kind. Gratis shares issued to shareholders pro rate to the shares held or increase of their par value are not regarded as income within the scope of the new Income Tax Law.
15% tariff rate applies to: certain income received from distributable profit, income from intellectual activities, income earned from the lease of property; income from sales of property or transfer of ownership title in the property, not issuing from individual activities. Income which does not fall under 15% tariff rate is subject to 33% income tax. A resident, receiving income from individual activities may choose either expense system (when determined income may be deducted from taxable amount) and pay 33% income tax or pay 15% income tax with no expenses allowed.
The Law provides for 42 types of income to be regarded as non-taxable. Some of these include: compensation for damages payable from non-life insurance; premiums under life insurance agreement with at least ten-year coverage, provided life insurance agreement was entered into before 1 January 2003, interest on loans with the maturity of at least one year, interest on deposits kept in licensed banks of Lithuania.
The law allows deducting the below expenditures from the income: premiums under life insurance contracts, payments into pension funds; interest on residential housing loans, tuition payments. If parents make tuition payments for their child, such payments may be deducted from taxable income. The amount of deducted expenditures may not exceed 25% of the amount of total taxable incomes received minus deductions.