News2019.12.06 14:00

Lithuanian parliament committee backs higher corporate tax for banks

Sniegė Balčiūnaitė 2019.12.06 14:00

The Lithuanian parliamentary Committee on Budget and Finance has backed the proposal to increase the corporate tax for banks from 15 to 20 percent.

Six out of eight committee members voted in favour of the bill which will now be considered by the parliament, Seimas.

On Thursday, the ruling parties proposed scrapping the earlier proposal of taxing bank assets and instead raising the existing corporate tax for banks to 22 percent.

Finance Minister Vilius Šapoka told the committee that banking profits were not expected to shrink this year.

The ruling parties on Thursday registered amendments to the Law on Corporate Tax, suggesting introducing an additional 7-percent tax for profits exceeding 2 million euros.

The minister later told BNS that if the Seimas backed the tax increase to 20 percent, the government budget would get around 20 million euros in additional revenue.

Mantas Zalatorius, the president of the Association of Lithuanian Banks, told BNS on Friday it was too early to say what the sector's position on the proposal would be and how the higher tax rate would affect the banks.

“The proposal emerged only 20 hours ago and was immediately approved by the committee, so banks have not had time to evaluate and study it. We will make calculations and give our insights to the public,” he said.

Zalatorius also said that raising the corporate tax for one sector might run counter to the Constitution.

The banking asset tax was proposed by the Electoral Action of Poles in Lithuania – Christian Families Alliance, part of the ruling coalition. On Thursday, however, other coalition members, the Lithuanian Farmers and Greens Union and the Social Democratic Labour Party of Lithuania, registered amendments to the the Law on Corporate Tax, suggesting introducing an additional 7-percent tax for profit exceeding 2 million euros.

Meanwhile, the committee voted against sending the banking asset tax bill to the Seimas with six votes against and three in favor.

Šapoka said on Thursday the corporate tax raise was a better option than the previously proposed banking asset tax.

The finance minister also said on Thursday that banks would have considerably less possibility to evade the corporate tax than the turnover tax.

Banks operating in Lithuania made 334.5 million euros in non-consolidated net profit last year.

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