CENTRE PLUS NEWS No. 4, 2013

STATE TAX INSPECTORATEState Tax Inspectorate (hereinafter - STI) is the authority responsible for tax administration.The main objectives of the STI are as follows: to help taxpayers and tax withholding individuals to exercise their rights and responsibilities, to enforce tax laws and ensure the payment of taxes to the budget.STI provides public and ad-ministrative services such as registration of taxpayers, income-tax returns admin-istration, the education and counseling of taxpayers, tax rebate and set-off, arrears management, issuance of documents to tax payers, etcThe main taxes paid by individuals living in Lithuania are these: income tax of physical persons, mandatory health insurance contributions,social insurance contributions.If you are employed, these taxes are withheld from your wage and paid by the employer. These fees are also paid in the royalty agreements. Usually they are also withheld and paid by the employer according to the agreed payment.

If you want to establish business in Lithuania, you shall be aware that the main taxes in business are

as follows:

1)Personal income tax (em-ployment related taxes) (PIT);2)Profits tax (Joint Stock Company, Close corporation, Sole proprietorship, Small partnership, partnerships, etc.); 3)Value-added tax (VAT) (paid by all companies regis-tered as VAT payers);

4)Companies and organiza-tions` real estate tax (com-panies pay, when they own registered real property);5)Contributions to the Guar-antee Fund (paid by all com-panies from the part of wage fund); 6)State social insurance con-tributions;7)Excise duties.All the above tax rates vary and are paid at different rates listed below:1)PIT - 15% income tax rate.2)Profits tax-15%.

3)VAT - 21%. It is applicable for selling and buying goods and services from their pur-chase price or production cost.

4)Real estate tax - from 0.3 % to 3 % (from the 1st of Janu-ary, 2013). Tax assessment is calculated from the average real estate market value deter-mined by the Centre of Reg-isters and applying the mass real estate valuation meth-od with certain exceptions.

5)Contributions to the Guar-antee Fund - 0.2 % (It is calculated from all kinds of benefits to employed per-sons from which the state social insurance contribu-tions are calculated and is paid from the date, when an employer begins to count the salary for employee).

6)State social insurance con-tributions (the contributions for separate insured groups are different. Detailed infor-mation about applied taxes:http: / /www.sodra. l t / index.php?page_vers=2&cid=23356 ) ;

These taxes have to be paid by warehouse keepers of taxable goods, registered or non-reg-istered traders, importers, and others required by law. More details on the appli-cation of taxes: http://www.vmi.lt/lt/?itemId=10830919 ).For tax purposes and propertydeclaration you should go

to the State Tax Inspector-ate in the place of your res-idence. The addresses of STI departments could be found on website: http://www.vmi.lt/cms/aptarnavimo-skyriai . You can also call to Tax In-formation Centre on short phone number 1882 (over-seas phone number +370 5 2553190, for subscribers of other fixed network opera-tors – 8 700 55882). Calling on short number you can find out: how to fill the annual or interim annual personal in-come tax and the individual (family) wealth declaration, how to fill value-added tax declaration, advanced and the annual profit tax declaration,how to send these declarations

through the e-declaration sys-tem, the information about personal income tax calcu-lation and payment issues, information about value add-ed tax, profits tax, real es-tate tax issues,information on tax administration and other general information (phone numbers, working hours, tax procedures, etc.). Information is provid-ed in Lithuanian, English and Russian languages. Also, for business establish-ment and tax administration issues you can contact the spe-cialist on business issues of Consultation and Information Center Plus. You can register for consultation by e-mail: centre@tja.lt or by phone:

+370 605 77 245 / (8-5) 261-74-82.

Centre Plius News No.4, 2013

TAX EXECUTIVE SERVICES (State Tax Inspectorate)

Usually the third-country nationals who have started and are developing their own businesses in Lithuania have to turn to the State Tax Inspectorate (hereinafter – STI) for help. Immigrant entrepreneurs from India and Egypt who have already visited STI more than once agreed to share their experiences.

C. S., a man from India, who is living in Lithuania for several years and is devel-oping his private enterprise, claimed that on all occa-sions, when he had to go to STI, he remained confused and frustrated: “Employees seemed quite friendly, but I noticed that they communi-cated with foreigners differ-ently than with Lithuanians. It seems that they are watch-ing at us through a magnify-ing glass. They were always very demanding and severe with me, and completely un-willing to compromise. In the meantime, I noticed that with Lithuanians they were look-ing for some mutually ben-eficial solutions.” The man also noted that even when he had asked his Lithuanian friends to accompany him to that institution, the situation did not change. However, the entrepreneur from India recognized that the reason ofsuch behavior was because of a widespread belief that

the aliens set up a lot of bo-gus businesses in Lithuania and left everything to chance:: “I’m ashamed of those foreigners who are fiction-al businessmen. Because of them suffer those who are en-gaged in real activities – we are checked very often, even though we all carried out un-der the Lithuanian law. I do not know if it is possible here to reach a compromise. It is shame to me as an immigrant and I grudge that other peo-ple of similar fate are trying to survive in a wicked ways and then victims of that are all of us..” Another disadvan-tage, on which pointed the entrepreneur from India, was the lack of English language proficiency in state institu-tions. The employees of STI,according to the business-man, either could not speak English or had a very nar-row vocabulary,so often there was a problem of

miscommunication: “I would suggest that at least one or more employees should work as agents and mediators in such institutions, and play an advisory role. They should be able to mediate and ex-plain the situation, translate and provide the necessary information to an alien who comes to the public body. It would be a great relief to me.” The businessman said that he noticed that very often for-eigners who had applied to the STI were referred from one employee to another trying to roll over liabilities, while the Lithuanians arranged all their matters with one employee. “I am almost convinced that the STI employees are more forgiving for Lithuanians, andthey simply do not like for-eigners, because they cause more problems. When you know this attitude it is very difficult to go to the authorities

Centre Plius News No.4, 2013

The newspaper is published, implementing the project “Consultation and information centre PLUS” according the European Fund for the

Integration of third-country nationals, annual Programme 2012

CENTRE PLUS · A.Smetonos street 5, room No 302 · VilniusTel.: 85 261 74 82 / 8 605 77 245

Email: centre@tja.lt · www.facebook.com (search for: Centre Plus)Working days: Monday to Friday · Opening hours: 11:30 to 15:30

and 16:30 to 20:30

Centre Plius News No.4, 2013

and to seek help.” – said C. S.Another businessman from Egypt who is living in Lithu-ania since 2005 and is devel-oping his business in export field, said that at the begin-ning he had confronted with many different problems: “The beginning was so diffi-cult that I even do not want to remember it. Often there were moments, when I wanted to drop everything and go back to my country, because every-one seemed hostile to me. But I firmly kept my plans and purposefully pursued my goals. That probably helped.” Egyptian remembered that af-ter he had come to Lithuania, he intensely studied Lithuani-an language: “I do not know how everything could be end-ed, if I would not speak theLithuanian language, be-cause at STI almost nobody spoke English. It would be impossible to me to manage all the affairs.” The business-man remembered the times, when he had to sign dozens

of documents and no-body explained, why all this was necessary and what was written in them: “They were passing me a doc-ument and saying that I had to sign it and that was all. At that time I survived a shock. But I trusted and believed in those people because they were from STI. And on the other hand,I can see pluses, because that situation pushed me to learn the language as quickly as possible.” J. G. welcomes the fact that the tax system in Lithuania is relatively stable and regu-lar, but it lacks a bit of clar-ity, especially for foreigners: “My recommendation would be that they should have at least a few employees who speak English and are able to play an advisory role and help foreigners to under-stand the current situation and to advise and explain, what documents are need-ed and what are not. Then,

I think, the whole process will quicken and both sides will be satisfied.” The busi-nessman remembered that when he addressed to an em-ployee who spoke at least a little English and was in-clined to cooperate then the whole process moved faster.Those immigrants did not ex-perience the very negative sit-uations however visits to the STI had always interrelated with some stress and uncer-tainty. This problem could be facilitated by English-speak-ing staff, which could car-ry out the intermediary role and provide the necessary information to foreigners