How is taxable profit calculated?

Taxable profits for the tax year are calculated by deducting the tax-exempt amount of income, allowable deductions and limited allowable deductions from income. Income refers to any cash and non-cash income generated in Lithuania and outside Lithuania, recognized in accordance with the applicable revenue recognition principle:

• on an accrual basis, for more information please see here (only in Lithuanian);
• on a cash accounting basis, for more information please see here (only in Lithuanian).

Not all income generated by companies is subject to corporate income tax. For income not subject to corporate income tax, please see here (only in Lithuanian).
Allowable deductions are expenses actually incurred in the ordinary course of activities necessary for the company to generate income or other economic benefits.