New tax laws drafted following the general taxation principles and harmonized with EU tax legislation were adopted and came into effect in Lithuania with the aim of developing a sustainable up-to-date taxation system enabling rapid economic growth and ensuring stable budgetary income, fair and proportional tax distribution, and fair competition.

The principles of taxation which were taken into account in the development of the Lithuanian taxation system and which may not be violated by any tax related legal act include: tax payer equality (in the application of tax laws, all taxpayers are equal with respect to provisions of the laws); equity and universal application (taxes must be paid by all taxpayers in accordance with the procedure established in tax laws; establishing tax relief of an individual nature is prohibited; the tax administrator must apply the criterion of fairness in tax administration); and clarity of taxation (the content of a tax liability must be clearly defined in the laws and regulations).

A list of laws forming the Lithuanian taxation system is provided in Article 13 of the Republic of Lithuania Law on Tax Administration. The following taxes and duties are considered to be the main ones:

• income tax of individuals;
• corporate income tax;
• value-added tax;
• excise duties;
• real estate tax;
• land tax;
• inheritance tax;
• lottery and gambling tax.

Enterprises registered in Lithuania must pay taxes in Lithuania on profits and capital gains earned both in Lithuania and abroad. Withholding taxes paid abroad and not exceeding the tax payable in Lithuania on foreign income may be credited. Moreover, relieves may be applied according to applicable international treaties. 

Tax	%
Personal income tax (after non taxable allowance of 84 Euro on monthly salaries)	24
Corporate profit tax	15
Tax on dividends	0 to 15*
Social security tax for employer (employee's contribution is 3%)	31
VAT	18
Real estate tax	1
Land tax	1.5

^*0% tax on dividends applies when an investor controls at least 10% of voting shares in the enterprise for the period of at least 12 months.

Sources: Ministry of Finance of the Republic of Lithuania and Lithuanian Development Agency, www.lda.lt