Background information

On 1 November 2022, the Procedure for establishing and administering the criteria for taxpayers in financial difficulties and affected by the energy crisis, who are subject to the tax aid measures (Order No VA-83 of the Chief of the State Tax Inspectorate) came into effect that provided for the possibility of tax deferral for energy-intensive undertakings (including owners of individual enterprises). The measure aims at easing the burden on businesses due to high energy prices.

Content of measure

According to the Procedure, as of 7 October 2022, undertakings where energy costs accounted for 10% or more of the costs incurred last year and this year may apply to the State Tax Inspectorate (STI) for a tax deferral. In order to receive the State aid, undertakings should apply to the STI no later than 28 February 2023. On receipt of the application:

• recovery of tax arrears generated between 7 October 2022 and 30 April 2023 shall be suspended or not started.
• payment of the arrears of national social security contributions generated between 7 October 2022 and 30 April 2023 shall be deferred.
• no late payment interest shall be charged for the period from 7 October 2022 to 30 April 2023.
• no interest shall be charged for the deferred period of deferment of the social security arrears.

Undertakings in bankruptcy and liquidation, and undertakings which have paid dividends after 7 October 2022 are not eligible for the aid.

Use of measure

According to estimates by the Ministry of Social Security and Labour (MSSL), more than 200,000 undertakings could be entitled to the suspension of tax recovery, and deferred social insurance contributions could reach €475 million.

Target groups

Workers	Businesses	Citizens
Does not apply to workers	Other businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government Employers' organisations Public support service providers	No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	No involvement	Consulted
Form	Not applicable	Any other form of consultation, institutionalised (as stable working groups or committees) or informal

Social partners' role in the implementation, monitoring and assessment phase:

• No involvement
• Main level of involvement: Peak or cross-sectoral level

Involvement

Employers organisations were partially involved in the design of the measure. E.g., on 8 September 2022, representatives of the country’s largest industrial companies attended a meeting of the Committee on Budget and Finance of the Seimas (Parliament) of the Republic of Lithuania, where they presented the current business situation and stressed the need for state aid.

Views and reactions

In general, the measure was welcomed by representatives of major employers’ organisations in Lithuania. However, according to the president of the Lithuanian Poultry Association (LPA), undertakings would like to see more direct support rather than tax deferrals. Although being a good measure, tax deferrals do not solve the problem, but only postpone it. By paying such prices for gas, some undertakings may end up on the verge of bankruptcy, and then tax deferral will be of no help.

Sources

• 17 October 2022: It is not clear to the businesses how the support promised by the state will be distributed (Verslui neaišku, kaip bus dalijama valstybės žadama parama (kauno.diena.lt)
• 31 October 2022: Order No VA-83 of the Chief of the State Tax Inspectorate (e-seimas.lrs.lt)