Liabilities of the taxpayer
Liabilities of the taxpayer
- Fines
- Default interest
- Exemption from fines and default interest
- Administrative and criminal liability
Fines
Taxpayers, third parties, managers and other responsible employees of legal entities, failing to meet or improperly meeting their obligations under the Republic of Lithuania Law on Tax Administration, face liabilities in accordance with the Republic of Lithuania Code of Administrative Offenses.
Article 139 of the Republic of Lithuania Law on Tax Administration provides that in case the tax administrator establishes during a tax inspection that the taxpayer has failed to calculate taxes not subject to declaration (including tax calculated in customs declarations), or has failed to declare taxes subject to declaration, or has unlawfully applied a lower tax rate, which has resulted in an unlawful reduction of the tax payable, then the taxpayer is charged with the amount of the tax shortfall, and a penalty in the amount of 10 to 50% of the amount of the shortfall is imposed, unless the law on the respective tax provides otherwise. When imposing penalties, the tax administrator determines the amount of the penalty in accordance with the rules for imposing penalties, established in Article 140 of this Law.
If the amount of the tax shortfall referred to in Paragraph 1 of this Article is calculated as a result of the tax administrator discovering income with sources thereof which cannot be substantiated by the taxpayer during the tax inspection, then the taxpayer is imposed with a fine of 50 to 100% of the amount of the tax shortfall calculated.
| Legal act | Amount of the fine | |
| 10 to 50% of the tax shortfall 50 to 100% of the tax shortfall | |
| 10 to 50% of the amount of VAT calculated | |
| Article 19 of the Law on State Social Insurance | 50% of the tax shortfall is imposed on the amount of reduced contributions |
LEGAL INFORMATION
Articles 139, 140, 142, 143 of the Republic of Lithuania Law on Tax Administration.
Republic of Lithuania Code of Administrative Offenses. Pursuant to Article 589(66) of this Code, the tax administrator is conferred with the right to issue administrative offense reports to natural persons who commit the respective offense.
Article 123 of the Republic of Lithuania Law on Value Added Tax.
Article 19 of the Republic of Lithuania Law on State Social Insurance.
Order No VA-25 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania of 28 March 2007 on the Approval of the Methodology for Imposing Fines and Calculating Default Interest.
Default interest
Article 96 of the Republic of Lithuania Law on Tax Administration establishes that default interest is calculated for the taxpayer as follows:
- for tax declared by the taxpayer which has not been paid or has been paid late to the budget, or for tax calculated by the taxpayer (or, if provided for in the relevant tax law, by the tax administrator) but not subject to declaration;
- for taxes subject to declaration but not declared, or for taxes not subject to declaration and not calculated, as determined by the tax administrator during a tax inspection, that have not been paid or have been paid late;
- for tax overpayments refunded (credited) without due grounds at the request of the taxpayer (except for cases where undue tax overpayments are refunded (credited) in error by the tax administrator).
In accordance with Article 99 of the Republic of Lithuania Law on Tax Administration, the amount of default interest and the procedure for its calculation are determined by the Minister of Finance, taking into account the weighted average of the annual interest rate of the Treasury Bills of the Republic of Lithuania issued by auction in the previous calendar quarter. The amount of default interest is determined by increasing the above interest rate by 10 percentage points. If no other interest rate is fixed, then the last interest rate set by the Minister of Finance applies.
LEGAL INFORMATION
Articles 96, 97, 98, 99 of the Republic of Lithuania Law on Tax Administration.
Order No VA-25 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania of 28 March 2007 on the Approval of the Methodology for Imposing Fines and Calculating Default Interest.
Exemption from fines and default interest
Taxpayers (tax withholders) may be exempted from fines and/or default interest.
Pursuant to Articles 100, 141 of the Republic of Lithuania Law on Tax Administration, the tax administrator has the right to exempt the taxpayer only from unpaid or unrecovered fines and default interest.
LEGAL INFORMATION
Articles 100, 141 of the Republic of Lithuania Law on Tax Administration.
Order No VA-144 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania of 26 July 2004 on the Approval of the Rules for Exemption from Penalties and Default Interest (version of the Order No VA-89 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania of 1 October 2012).
Administrative and criminal liability
Taxpayers, third parties, managers and other responsible employees of legal entities, failing to meet or improperly meeting their obligations under the Republic of Lithuania Law on Tax Administration, face liabilities in accordance with the Republic of Lithuania Code of Administrative Offenses.
Pursuant to Article 127 of the Republic of Lithuania Law on Tax Administration, the tax administrator is obliged to inform the law-enforcement authorities in case it has detected during the course of a tax inspection activities that have the characteristics of criminal offences and other law violations.
The most common offences detected during a tax inspection are the following:
Crimes and criminal offences against property, property rights and property interests
Article 182. Fraud.
Crimes and criminal offences against the economy and business order
Article 202. Unlawful pursuit of economic, commercial, financial or professional activities.
Article 203. Unlawful pursuit of activities of a legal entity.
Article 209. Criminal bankruptcy.
Crimes and offences against the financial system
Article 219. Failure to pay taxes.
Article 220. False declaration of income, profits or assets.
Article 221. Failure to file tax returns.
Article 222. Fraudulent keeping of accounts.
Article 223. Negligent keeping of accounts.
Crimes and offences against management procedures, relating to forgery of documents or measuring instruments
Article 300. Forgery of a document or use/disposal of a forged document.
LEGAL INFORMATION
Article 143 of the Republic of Lithuania Law on Tax Administration.
Republic of Lithuania Code of Administrative Offenses.
Recovery of tax arrears
Taxpayers (tax withholders) are not always able to pay taxes and tax-related amounts within the due dates set by law. Failure to pay the above amounts in a timely manner in accordance with the procedure established by the tax laws or accompanying legal acts adopted on the basis thereof results in tax arrears, as pursuant to Article 2(19) of the Republic of Lithuania Law on Tax Administration.