Corporate income tax changes: what business should know

Corporate income tax rules change, and rates and reliefs directly affect a company's bottom line. It is worth understanding the key principles and assessing in time how they apply to your business.

Rates and reliefs

Corporate income tax in Lithuania is calculated under the Corporate Income Tax Law. Alongside the standard rate, a reduced rate applies to small companies meeting certain conditions (employee-count and income thresholds), and a relief may apply for the first activity period in certain cases. The exact rates and conditions depend on the tax period and the company's situation, so they should be verified each year.

Loss carry-forward

If a company incurs a tax loss, it can generally be carried forward to later periods and offset against future operating profit. This is an important tool for balancing the tax burden between profitable and loss-making years.

What to consider when planning

• whether the company meets the reduced-rate conditions;
• how allowable and non-allowable deductions are accounted for;
• whether carried-forward losses are used appropriately;
• which investment and other reliefs may apply.

Thoughtful tax planning before the end of the tax period often allows the payable amount to be reduced legitimately and overpayments to be avoided.