Representatives of Lithuania’s five largest banks – Citadelė, Luminor, OP Corporate Bank, SEB Bank, and Swedbank – have met with Prime Minister Ingrida Šimonytė and expressed concerns over the “unpredictability” of the country’s investment environment.
“Investors stressed they are ready to cooperate with the government to strengthen the role of the financial sector within the Lithuanian economy, but they also expect a more predictable business environment in the long term and a better dialogue between decision makers and the business community,” the association said in a statement issued after the meeting.
At the meeting, the banks’ representatives expressed their concerns about the “unpredictable tax policy” the banking sector has been subjected to recently, as well as the lack of cooperation with the business sector.
“Given the current geopolitical situation, this creates a high level of uncertainty for banks and investors and undermines Lithuania’s investment environment and attractiveness,” the banking body argues. “The tax changes have caused a number of investors to question the predictability of the regulatory environment.”
In June, the Lithuanian parliament extended the temporary tax on bank’s windfall profits, the so-called solidarity contribution. It was introduced last year and was to expire in 2025, but will stay in place for another year.
Moreover, the parliament raised the corporate tax by 1 percent, to 21 percent, in order to boost defence spending.
The banking association also noted that the 20-percent profit tax previously introduced as a temporary rate for banks was made permanent a few years ago.
Finance Minister Gintarė Skaistė has previously said that the extension of the windfall profit levy is of particular national importance in ensuring Lithuania’s security interests. In her words, the exceptional situation where banks enjoy exceptionally high profits due to the European Central Bank’s policies will continue for at least one more year, which is why the government plans to collect the levy for another year.
The central Bank of Lithuania estimates that the solidarity levy could raise 50–70 million euros next year.
Banks have paid around 240 million euros in solidarity levy for 2023 and are expected to pay a similar amount for 2024.
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