Lithuania: Changes in corporate income tax rates enacted

The new Defense Fund package was approved by the Parliament on June 20, 2024, and signed by the President on June 28, 2024. The package includes changes in corporate income tax rates, as well as an extension of solidarity contributions, excise duty increases, and introduction of the concept of security contributions (insurance premium tax).  

The package is intended to increase the country's defence funding for 2025 - 2030, in light of the commitments by NATO countries to increase national defense spending to 3% of gross domestic product (GDP).

The main change in the package is an increase in the standard 15% corporate income tax rate to 16%, and the increase in the reduced 5% corporate income tax rate (for small companies based on certain requirements) to 6%. Accordingly, the standard tax rate for dividends will also be increased to 16%, and qualifying profits from commercialization of patentable inventions and software will be increased to 6%. The changes will become effective on January 1, 2025.

The tax benefits for healthcare and life insurance companies are generally also abolished under the package, and specific limitations for deductions of car purchases and rental expenses, which will be linked to the vehicle's CO2 emissions, are also introduced.

In addition, the concept of security contributions was introduced with an aim towards taxing insurance premiums, but it is yet to be officially passed (likely in autumn 2024).

Read a related release from the Lithuanian Ministry of Finance

For more information, contact a KPMG tax professional in Lithuania:

Vita Šumskaitė | vsumskaite@kpmg.com

Ignas Ričkus | irickus@kpmg.com