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1 January 2014 Tax newsletter This Newsletter reflects the most important changes in the national legislation on taxes, finance and other issues published in January The review is based on the publications in the register of Legal Acts ( Contents: Ministry of Social Security and Labour State Tax Inspectorate under the Ministry of Finance of the Republic of Ministry of Finance Centre of Registers n Film Centre Seimas of the Republic of Government of the Republic of On 1 July 2013 EY adopted the new global brand name and Building a better working world as its purpose. Tax Newsletter, January 2014, 1

2 Ministry of Social Security and Labour Order No A1-50 of 27 January 2014 of the Minister of Social Security and Labour of the Republic of on the Approval of Penalty Rate. This Order established 0.07 percent penalty rate for late payment of allowances related to labour relations. This Order came into force on 1 February State Tax Inspectorate under the Ministry of Finance of the Republic of Order No VA-1 of 8 January 2014 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Amending the Order No VA-145 of 26 July 2004 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of on the Approval of the Rules for the Completion and Submission of the Annual Form FR0573 for the Declaration of A Class Payments and the Related Deducted and Paid Income Tax, and Its Appendices FR0573A and FR0573U. This Order amended the Annual Form FR0573 for the Declaration of A Class Payments and the Related Deducted and Paid Income Tax, and Its Appendices FR0573A and FR0573U, and amended and presented a new wording of the rules for their completion and submission. It was established that the new wording of the form FR0573 (version 4) shall be submitted and the new version of the Rules shall be followed when declaring the payments that are attributable to A class income based on the income tax payment procedure and that are paid in 2014 and subsequent tax periods. This Order came into force on 16 January Order No VA-3 of 23 January 2014 of the Head of Finance of the Republic of Amending the Order No VA-13 of 9 February 2004 on the Approval of the Form for the Annual Declaration of a Resident s (Family s) Property and the Rules for Its Completion, Submission and Adjustment. This Order amended the Form FR0001 for the Annual Declaration of a Resident s (Family s) Property and its appendices as well as amended the Rules for the Completion, Submission and Adjustment of the Form FR0001 for the Annual Declaration of a Resident s (Family s) Property and its appendices. It was established that the new wording of the Form FR0001 shall be used when declaring the property held in 2013 and subsequent reporting years (reporting periods), also when adjusting the form FR0001 submitted in the prior tax years. The Order came into force on 24 January Order No VA-4 of 23 January 2014 of the Head of Finance of the Republic of Amending the Order No VA-106 of 26 May 2014 of the Head of Finance of the Republic of on the Approval of the Rules for the Completion and Submission of Excise Tax Return Forms FR0630 and FR0630A and Their Appendices. This Order amended the excise tax return forms FR0630 and FR0630A with appendices. Amendments were also made to Paragraph 40.1 of the Rules regarding the completion of FR0630S return stating that field 20 shall specify the excise tax rate of the tariff group of goods in litas indicated in field 19 (with the accuracy of one ten thousandth of litas) for the quantity of goods comprising one unit of measurement. The rate of the tariff group of goods shall be selected based on the section of Appendix 1 Explanations of the application of excise tax rates of these Rules. If goods of one tariff group of goods are subject to different excise tax rates, they shall be specified in separate FR0630S appendices of that tariff group of goods. When filling in the appendix FR0630S, this field shall not be filled in for the goods attributable to the tariff group 310. The Order set forth that starting from 1 February 2014 the persons specified in paragraphs 5, 6, 7, 8, 9 and 10 (when submitting the form FR0630) and in paragraphs 11, 12, 13, 14, 15, 16, 17 and 18 (when submitting the form FR0630A) of the Rules for the Completion and Submission of Excise Tax Return Forms FR0630 and FR0630A and Their Appendices may submit version 08 of the excise tax return form FR0630 and FR0630A and their appendices using the Electronic Declaration System Tax Newsletter, January 2014, 2

3 (EDS) or directly to the regional state tax inspectorates (RSTI). This provision is applied when submitting version 08 of the excise tax return form FR0630 and its appendices for the tax periods starting on 1 January This Order came into force on 25 January Order No VA-5 of 23 January 2014 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Amending the Order No VA-77 of 8 November 2013 of the Head of Finance of the Republic of Amending the Order No VA-96 of 15 December 2009 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of on the Approval of the Rules for the Completion, Submission and Adjustment of the Annual Income Declaration Form GPM308. With this Order, Paragraph 2 of the Order No VA-77 of 8 November 2013 was set out as follows: 1. When declaring income received by residents in the tax periods 2009, 2010, 2011 and 2012 or when adjusting the data submitted for the above periods to the tax administrator, the following shall be submitted at the choice of the permanent resident of : a. Version 01 of the annual income declaration form GPM308 approved by the Order No VA- 96 of 15 December 2009 of the Head of the State Tax Inspectorate under the Ministry of Finance of the republic of ; or b. Version 02 of the annual income declaration form GPM308 and its appendix forms (except for the GPM308M appendix Income from individual activity by months) approved the Order No VA-77 of 8 November 2013 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of. 2. When declaring the income received by residents in the tax period of 2013 or when adjusting the data submitted to the tax administrator for this tax period, version 02 of the of the annual income declaration form GPM308 and its appendix forms shall be submitted. This Order came into force on 25 January Order No VA-94 of 31 December 2013 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Amending the Order No V-137 of 16 April 2003 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of on the Approval of the List of the Models of Cash Registers and Automatic Vending Machines Allowed to Be Used in the Republic of and of the Rules for the Inclusion of the Models of Cash Registers and Automatic Vending Machines in this List. This Order sets forth that the data of the models of cash registers and automatic vending machines included in the list that used to be published in the Official Gazette, shall now be published in the Register of Legal Acts. The requirement that requests for the inclusion of the models of cash registers and automatic vending machines in the list can only be submitted by enterprises (applicants) registered in the Republic of and the provision that the Government of the Republic of or the Minister of Finance of the Republic of shall adopt a decision (due to change in the technical requirements, detected deficiencies, etc.) to forbid trade in certain models of cash registers and automatic vending machines or their groups were annulled. This Order came into force on 21 January Ministry of Finance Order No 1K-420 of 31 December 2013 of the Minister of Finance of the Republic of Amending the Order No 1K-203 of 22 June 2010 of the Minister of Finance of the Republic of on the Approval of the Procedure for the Payment of Ineligible Value Added Tax on Projects Co-financed from the European Union Funds. This Order amended the presented a new wording of the Procedure for the Payment of Ineligible Value Added Tax on Projects Co-financed from the European Union Funds. This Order came into force on 14 January Centre of Registers Order No V-27 of 28 January 2014 of the State Enterprise Centre of Registers Amending the Order No V-115 of 15 May 2013 on the Approval of the Rules for the Consideration of Complaints and Requests by Real Estate Tax and Land Tax Payers. Tax Newsletter, January 2014, 3

4 The term for the elimination of deficiencies regarding a submitted complaint was extended from 5 to 10 days; other terms related to the consideration of a complaint were extended as well. It was set forth that when submitting a complaint regarding the value of real estate, the report presented by the claimant shall contain calculations of the market value of each real estate unit (building) and land plot, which are submitted for the adjustment of the tax value. The requirement that the original of the report should be submitted for the consideration of the claim was annulled. This Order came into force on 31 January n Film Centre Order No V-41 of 31 December 2013 of the Director of the n Film Centre under the Ministry of Culture on the Approval of Certain Corporate Income Tax Advantage Documents and Their Forms. This Order approved the following documents to be completed in order to apply corporate income tax advantage to film production: 1. Procedure for the appointment of an expert commission for the evaluation of the cultural contents of films, for the decision making and payment for the services of the members of the expert commission; 2. Application form for the issue of a certificate qualifying a film; 3. Form for the financing plan for a film; 4. Film qualification certificate form. This Order came into force on 9 January Seimas of the Republic of Law No XII-735 of 23 December 2013 of the Seimas of the Republic of on the Ratification of the Agreement between the Government of the Republic of and the States of Guernsey for the Exchange of Information Relating to Tax Matters. This Law ratified the Agreement between the Government of the Republic of and the States of Guernsey for the Exchange of Information Relating to Tax Matters signed on 20 June 2013 in London. This Law came into force on 7 January Law No XII-700 of 19 December 2013 Amending the Civil Code of the Republic of. Since in 2011 the European Parliament and European Council adopted the Directive on Consumer Rights and since the term for its mandatory transposition in the national law comes to an end, the Seimas of the Republic of adopted amendments to the Civil Code of the Republic of and related legal acts, which were signed by the President of the Republic of at the beginning of this year. The future amendments to legal acts will strengthen the protection of consumer rights in, as they will provide more possibilities for persons shopping in on-line shops and will establish additional requirements for the owners of on-line shops. The most significant changes will be encountered when concluding sales agreements on the internet as specified below: On-line shops will be prohibited from using hidden fees, and the customer will have to give a clear agreement regarding any additional fees Sellers shall not be able to require additional payments if the customer was not informed about them when placing the product order Use of pre-checked selection boxes cannot be used on websites The term for refusing the product is extended from 7 to 14 days It is forbidden to set higher prices on goods than the seller s price paid due to the credit card settlements made by the buyer This Law came into force on 13 June Law No XII-743 of 23 December 2013 Amending Articles 33 and 39 of the Law on Competition of the Republic of. With this Law, amendments came into force which established changes in the procedure for the payment of fines for the breaches of the Law on Competition. From now on, submission of an appeal against the Competition Council resolution imposing a fine on an economic undertaking shall suspend forced exaction of the fine and interest until the court decision comes into effect. In accordance with the previous wording of the Law, the fine had to be paid at the expiry of the set term irrespective of whether Tax Newsletter, January 2014, 4

5 the appeal was submitted to the court or not. The new wording of the Law on Competition also contains a new provision regarding the payment of 6 percent interest in the case when the economic undertaking does not pay the imposed fine on time, i.e. within 3 months after the decision imposing the fine was published on the website of the Competition Council. Also, in order to prevent economic undertakings from abusing the process right granted thereto and in order to avoid the situation when economic undertakings appeal against the resolutions of the Competition Council only to postpone the term for paying fines, the new amendments to the Law should be interpreted as non-suspending calculations of interest if the imposed fine is not paid on time. Therefore, even the companies that have appealed to court against resolutions of the Competition Council can pay the fines within the initial period of three months thus avoiding pending interest. It should be noted that in accordance with the amendments that came into force, if an economic undertaking does not appeal against the resolution, it is subject to the calculation of interest for a fixed term 180 days. This Law came into force on 8 January Government of the Republic of Resolution No 1212 of 11 December of the Government of the Republic of Amending the Resolution No 1458 of 15 December 2000 of the Government of the Republic of on the Approval of the Specific Rates of Stamp Duty and the Rules for the Payment and Refund of this Duty. The Government of the Republic of adopted a Resolution regarding amendments to the specific rates of stamp duty and the rules for the payment and refund of this duty and provided for a possibility to reduce in half the term for the consideration or registration of a permit for an alien to temporarily or permanently reside in, provided that twice as high stamp duty is paid than in the case when the full term is applied. Thus, if an alien wishes to receive a permit for temporary or permanent residence in, instead of a procedure that costs LTL 400 and lasts 2 months in order to have an EU Blue Card issued, he/ she can now pay the stamp duty of LTL 800 and receive the above card within 1 month. This Resolution came into force on 1 February Tax Newsletter, January 2014, 5

6 EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. Disclaimer The Information contained in this Guide is intended solely for the information purposes and shall not be treated as professional advice or legal opinion. For information that may be substantial when taking decisions, please contact: Jelena Semionova Leonas Lingis Tax Services Baltics Tax Services Subačiaus St. 7 Subačiaus St. 7 Tel Tel Fax Fax Jelena.Semionova@lt.ey.com Leonas.Lingis@lt.ey.com Julija Lisovskaja Advocate Law Services Subačiaus St. 7 Tel Fax Julija.Lisovskaja@lt.ey.com Kęstutis Lisauskas Vaida Lapinskienė Business Tax Services CSE Leader Business Tax Compliance CSE Leader Subačiaus St. 7 Subačiaus St. 7 Tel Tel Fax Fax Kestutis.Lisauskas@lt.ey.com Vaida.Lapinskiene@lt.ey.com 2013 Ernst & Young. All rights reserved. ey.com Tax Newsletter, January 2014, 6