Estonia, Latvia, and starting from this year Poland (partly) are taxing profits earned by companies only at the dividend payout time. Such a model promises to raise both domestic and foreign investment, and it can help the economy recover from the crisis more quickly. The opponents of this taxation system in Lithuania argue that various benefits, which alleviate the burden on business and encourage investment where it is most needed, are already in place.
The Ministry of Finance has undertaken a systematic review of tax benefits. This job will not be easy but it makes sense to look at tax benefits in difficult situations. At first glance, it might seem that there are not many tax benefits so they can be examined and sorted in one sitting. Sadly, this is not the case. There are many different benefits which are advantageous to some citizen groups but annoy the others.
Today, the most worrisome problem is the pandemic and its management. The second problem is the effects of the pandemic on the economy and people. Other issues that seemed fundamental until recently, have been moved to the bottom of the agenda. But they did not disappear. One of those problems is population ageing. It continues, as it did before the pandemic, in Lithuania and all the Western world.
The OECD claims that financial literacy is a significant skill in participating in modern society. Pupils should be improving their financial knowledge as early as possible to become active agents of their abilities to plan simple finances. Kids should learn how to plan their spendings and savings and how to build responsible financial behavior.
The Lithuanian Free Market Institute (LFMI) announces the celebration of Tax Freedom Day on Tuesday in Lithuania. The fact that it is celebrated almost three weeks later than last year shows increased government spending.
In 2019, we celebrated the 550th anniversary of the Union of Lublin that established the Polish-Lithuanian Commonwealth, which included the territories of today’s Ukraine, Belarus, Lithuania, and even Latvia. In reference to those events, which bound Poland to those lands for the next two hundred years, the establishment of the Lublin Triangle took place in July 2020.
Lithuania ranks sixth in the Global Tax Competitiveness Index but it has the least attractive corporate tax regime in the Baltic region. It taxes retained and reinvested profits and applies a personal income tax when dividends are paid out. The effective combined tax rate stands at 27.7%. Estonia and Latvia tax only redistributed profits, at 20%.
On May 11, 2021, Lithuania celebrates The Day of Respect for the Taxpayers. On this occasion, the Lithuanian Free Market Institute (LFMI) invited everyone to thank all taxpayers for their contribution to the welfare of the country.
In recent years, there has been a significant growth of an interest in the gig economy built upon the premise of online platforms that connect customers with service suppliers. Platform work brings more opportunities to traditional businesses by closely connecting suppliers and customers and reducing transaction frictions.
The second lockdown in Lithuania is no different from the first one: there are no clear principles for economic relief, individual groups are fighting for their own interests, and the government is forced to constantly alleviate the emerging effects of the quarantine. But what if lockdowns persisted?