LAW ON TAXES ON PROFITS OF LEGAL PERSONS, 31 July 1990, No. I-442 (as amended by 11 July 2000 No. VIII-1818) (official translation, excerpt)

Chapter 1. TAXABLE ENTITIES AND TAXABLE OBJECT

Article 1.

A profit tax shall be imposed on:

a) enterprises with rights of legal persons, the activities whereof are regulated by the Republic of Lithuania Law on Enterprises;

b) legal persons engaged in non-commercial activities who nevertheless received income from commercial-economic activities, with the exception of the Bank of Lithuania, the State enterprise Deposit Insurance Fund and non-budgetary resources of institutions whose expenditures are fully reimbursed from the State Budget;

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Chapter 2. ASSESSMENT OF TAXABLE PROFIT

Article 3.

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When computing taxable profit, the following income shall be eliminated from non-operating revenue:

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5) sums received for charity and sponsorship regulated by the Republic of Lithuania Law on Charity and Sponsorship;

6) income of all religious communities and centres (administrative institutions of higher level): donations, income from the sale of property received as charity, provided said income is assigned for building, renovation and reconstruction of the house of worship, also for charity, culture and education;

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Article 4.

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The amount of the total taxable profit shall be reduced by the tax-exempt amounts assigned for charity and sponsorship specified in Article 6 and payments from profit on which the natural persons income tax is levied. Taxable profit which is profit subject to taxation shall be established upon deducting the above amounts.

If the enterprise shows a loss (negative results) during the taxable year, it shall be permitted to carry the losses over to the following taxable year. The carry-over of the taxable year losses shall be permitted for the maximum period of five taxable years measured from the year following the formation of losses. No carry-over of losses shall be permitted upon the expiry of the five-year period.

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Taxable profit of legal persons engaged in non-commercial activity shall be computed as difference between the income from paid services and works and their performance costs.

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Article 4¹.

Enterprises which hold cash and cash-and-prize lotteries, except for those whose founder is the National Olympic Committee of Lithuania, (...) the Lithuanian Society of the Child, the Lithuanian Society for the Disabled, the Union of People with Disabilities and the Lithuanian Society for the Blind and Partially Sighted, shall pay into the budget 13% of income from the sales at nominal value of lottery tickets (cards). Enterprises which hold cash and cash-and-prize lotteries, whose founder is the National Olympic Committee of Lithuania, (...) the Lithuanian Society of the Child, the Lithuanian Society for the Disabled, the Union of People with Disabilities, the Lithuanian Society for the Blind and Partially Sighted shall pay into the budget 5% of income from the sales at nominal value of lottery tickets (cards) and shall in a mandatory manner allot to charity and sponsorship 8% of income from the sales at nominal value of lottery tickets (cards). The procedure of payment into the budget of the prescribed amount of income and of allotting the required amount to charity and sponsorship, also the lists of sponsors and beneficiaries of sponsorship shall be specified by the Government of the Republic of Lithuania. Tax concessions established in paragraph 2 of Article 6 shall not apply to the mandatory amounts allotted to charity and sponsorship as prescribed by this Article.

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Article 6.

The actual expenses for charity and sponsorship, confirmed by legally valid documents shall be eliminated from the legal persons’ total taxable profit computed according to the procedure established in Article 4 of this Law, provided that the persons are entitled to give charity under the Law on Charity and Sponsorship of the Republic of Lithuania.

For charity donors and sponsors provided for under the Law on Charity and Sponsorship of the Republic of Lithuania, who are not specified in paragraph 1 hereof, the actual expenses for charity and sponsorship, confirmed by legally valid documents, shall be twice deducted from the taxable profit computed in the manner established in Article 4 of this Law; the deducted amount, however, must not exceed 40% of the total taxable profit.

Where fixed assets are given as charity and sponsorship, the total value of charity and sponsorship shall amount to the residual value of the assets. Where other valuables are donated for charity and sponsorship, the total value of the given charity and sponsorship shall amount to the acquisition costs (production costs) of the valuables. Where charity and sponsorship is given by providing services, the value of charity and sponsorship shall amount to the costs of the services. Where sponsorship is given by conveying tangible long-term assets under a loan-for use agreement, the value of sponsorship shall be calculated as the total assets depreciation costs during the period of the use thereof by the recipient of sponsorship.

The share of profit of free economic zone enterprises and zone management companies used for the acquisition of fixed assets, for scientific research and introduction of new technologies as well as for investment in the zone shall not be subject to taxation.

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Chapter 7. OTHER PROVISIONS

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Article 20.

Profit tax concessions established in 6, 7 and 8 paragraphs of Article 8 of this Law shall be applicable in cases where the enterprise was set up (registered) or foreign capital was invested, or foreign capital investment in the enterprise reached USD 2 million prior to 1 April 1997.

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