Calculation and recalculation of taxes

 

Calculation of taxes

Article 66 of the Law on Tax Administration establishes that the tax due shall be calculated by the taxpayer himself (the withholding agent, hereinafter - the taxpayer) in compliance with tax legislation, except for the exemptions provided for in relevant tax legislation. If the taxpayer notices that the tax has not been calculated correctly, he shall recalculate both the tax subject to and not subject to declaration.

The taxpayer shall inform the State Tax Inspectorate (hereinafter - the STI) about the calculated (recalculated) amount of tax subject to declaration by filing (revising) tax returns (unless tax laws provide for otherwise). The taxpayer shall not inform the STI about calculated amount of tax not subject to declaration.

If the taxpayer failed to calculate the tax in accordance with the procedure prescribed by laws or, having calculated it incorrectly, did not recalculate it, the tax administrator shall calculate the tax to be paid by the taxpayer pursuant to tax returns filed by the taxpayer, his accounting and other documents and other special tax calculation methods.

Taxes and related amounts shall be calculated in euros, and each monetary obligation shall be rounded in the following manner: 49 and less cents shall be rounded by rounding down (eliminating), 50 and more cents - by rounding up to the euro. The taxpayer shall pay to the budget a rounded tax amount.

Article 69 of the Law on Tax Administration establishes that in cases where a taxpayer's transaction, economic operation or any combination thereof is concluded with a view to gaining a tax benefit, namely:

  • to defer, directly or indirectly, the deadline for the payment of tax,
  • reduce the payable amount of tax,
  • fully avoid the payment of taxes,
  • increase the tax overpayment (tax difference) to be refunded (credited),
  • shorten the time limit for refunding the tax overpayment (tax difference),

the tax administrator shall apply the content-over-form principle for the purpose of calculating the tax, i.e. the tax administrator shall not take into account the formal expression of the taxpayer's activity and shall recreate the distorted or hidden circumstances, wherewith tax laws associate the taxation, and calculate the tax pursuant to relevant provisions of the said tax laws.

In cases where the taxpayer makes a mistake when completing accounting documents and filing tax return, and also in other cases where the taxpayer's activity does not comply with formal requirements of legal acts, although the content of such activity corresponds to the circumstances wherewith tax laws associate the taxation, the tax shall be calculated pursuant to relevant provisions of the said tax laws.

Article 70 of the Law on Tax Administration establishes that in cases where the taxpayer fails to discharge or properly discharge his obligation to calculate taxes, cooperate with the tax administrator, keep accounts, safekeep accounting and other documents, which precludes the tax administrator from determining the amount of the taxpayer's tax liability pursuant to the standard procedure, i.e. a procedure laid down in the relevant tax law, the tax administrator shall assess the amount of tax to be paid by the taxpayer, taking into account all of the circumstances relevant for the assessment, the information available and, if necessary, selecting the methods of assessment laid down by him that comply with the criteria of prudence and, in so far as objectively feasible, fairness in determining the amount of tax liability.

LEGAL INFORMATION

Article 66, 69, 70 of the Law on Tax Administration.

Order No. VA-103  of the Chief of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania of 24 May 2004 "On the Approval of the Rules for Calculating Tax according to Assessment of the Tax Administrator".

Limitation period for tax calculation and recalculation

Article 68 of the Law on Tax Administration establishes that unless the relevant tax law provides otherwise, the taxpayer or the tax administrator may calculate or recalculate the tax in respect of a period not exceeding the current calendar year and five preceding calendar years counting back from January 1st of the year when the tax was started to be calculated or recalculated. This provision shall not apply when the tax administrator conducts a re-inspection of the taxpayer, but the tax administrator cannot calculate the tax for a period exceeding the period in respect of which the tax was calculated in the course of the initial inspection.

If the taxpayer presents a tax return or a revised tax return less than 90 days till the expiry of the deadline for tax calculation (recalculation) provided for in paragraph 1 of Article 68 of the Law on Tax Administration, the tax administrator may check the correctness of the calculation of tax declared in this tax return and recalculated it disregarding provisions laid down in paragraph 1 of Article 68 of the Law on Tax Administration, if the tax administrator starts the inspection no later than within 90 days from the day of submission of this declaration.

Tax calculation or recalculation for a longer period of time shall be possible only in the event that a criminal case requires that the damage caused to the state be determined and the limitation periods set out in the Criminal Code for passing a conviction have not expired.

Agreement on the amount of taxes and related amounts

Article 71 of the Law on Tax Administration establishes that the tax administrator and the taxpayer may conclude an agreement regarding amounts of taxes and related amounts, provided that for the purpose of calculating taxes neither of the parties has sufficient evidence to substantiate their calculations.

After having signed such an agreement, the taxpayer shall lose the right to dispute the correctness of tax calculation and the tax administrator shall lose the right to calculate an amount larger than specified in the agreement. The aforementioned agreement may be signed in the course of a tax inspection or tax investigation as well as during all of the stages of the settlement of tax disputes.

The taxpayer who does not have sufficient evidence to substantiate his tax calculations and willing to sign an agreement:

1. shall during the tax inspection and tax investigation (before making the decision on the approval of  an inspection report) address the tax administrator conducting  a tax inspection or a tax investigation in writing.

2. shall during the tax dispute examined by the State Tax Inspectorate under the Minister of Finance of the Republic of Lithuania, Commission on Tax Disputes under the Government of the Republic of Lithuania or court address the STI under FM regarding the signing of an agreement  in writing, or submit a proposal to the STI under FM via the county state tax inspectorate having conducted a tax inspection.  

Legal information

Article 71 of the Law on Tax Administration.

Order No. VA-210 of the Chief of the STI under FM of 30-12-2004 "On the Approval of the Rules for Signing an Agreement of the Tax Administrator and Taxpayer Regarding the Amount of Tax and Related Amounts".