We Create the Best Environment for Innovations


2017 05 04


Lithuania creates the most favourable across the European Union (EU) tax regime for investments in research, commercialisation of inventions, new technologies. Today the tax proposals opening the way for it have been presented by Prime Minister Saulius Skvernelis and Minister of Finance Vilius Šapoka.

“I believe that these decisions together with other measures may contribute to reducing emigration, attracting new talents and facilitating creation and development of businesses, production and job creation. We are thinking not only about the challenges that we must solve today (reduction of income inequality, emigration), but also about the problems that we will face in the future. Therefore, having analysed international experience, consulted the scientists and business representatives of our country, we propose a new package of incentives,” said Prime Minister Saulius Skvernelis.

Minister of Finance Vilius Šapoka also emphasizes that Lithuania is in a favourable situation, only accurate and fast encouragement from the state is needed so that business increased investments in converting scientific knowledge into innovative products.

“There are a lot of intelligent, talented, smart and innovation-intensive people in Lithuania. In search of a more favourable environment for implementation of inventions, their use, business creation minds with all their inventions often leave elsewhere. What the state can do – to see those people, appreciate, encourage, support them and to enable them realise themselves and earn from that here, in Lithuania,” said the Minister of Finance.

“A more attractive tax regime as well as other possible reliefs on commercialisation of inventions would not only improve the Lithuanian innovation ecosystem and encourage the development of local enterprises but would also become a good sales offer aimed at attracting innovative foreign companies. It would be a solid first step. The next one – flexibility and simplification of administration. In order to ensure that R&D tax reliefs and incentives were used and changed the investment environment in essence, it is necessary to create favourable conditions for simplifying their administration so that these reliefs were used efficiently,” states Director General  of foreign investment development agency “Invest Lithuania” Mantas Katinas.

A 5% corporate income tax rate

It is proposed to establish that profits accumulated from commercialisation of intellectual property created by the enterprise itself in carrying out R&D activities would be taxed by applying a particularly favourable 5% corporate income tax rate, where at present such profits is subject to taxation by a standard 15% corporate income tax rate.

It is planned that the relief will come into force from the following year.

A 100% relief on investments in technological renewal

In order to enhance productivity, it is proposed to enable the enterprises implementing investment projects and investing in technological renewal to reduce the taxable profits by the expenditure incurred up to 100%. Currently, such enterprises may reduce the taxable profits by the expenditure incurred half as much -   up to 50%.

It is planned that the relief will come into force from the following year.

A 300% relief on R&D activities

According to the data by the Organisation for Economic Cooperation and Development (OECD), at present in calculation of the corporate income tax in the country a relief applied when the costs, except for depreciation and amortisation costs of fixed assets, incurred in carrying out R&D activities, are deducted from the income three times is one of the most significant ones.

The prerequisite – R&D works must be related to the usual activities carried out or planned to be carried out by the enterprise that produces or will produce economic benefits.

1 billion of EU investments – for promotion of innovations

Following the Operational Programme for EU Investments in 2014–2020, about 1 billion of EU funds will be granted for innovation development, implementation, commercialization and application.