Corporate income tax set to rise to 17 %

Press release, 17 June 2025

The Seimas has adopted amendments to the Law on Corporate Income Tax providing for an increase in corporate income tax from 2026.

Under the adopted amendments, both the standard and the reduced corporate income tax rates will increase by one percentage point to 17 % and 7 % respectively. The aim is to contribute to securing sustainable sources of revenue for the financing of defence.

As regards small businesses, it has been decided to extend the period ­­— from one to two years —during which the profits earned by newly-registered companies will be subject to a 0 % corporate income tax rate, thus facilitating their growth and development. At the same time, the requirement for these small entities not to exceed the average number of 10 employees on the staff list to qualify for the tax relief has been abolished. The only eligibility criterion will now be a taxable income of no more than EUR 300,000 during a tax period.

As noted in the conclusion of the Seimas Committee on Budget and Finance, Lithuania ranks as a country with one of the lowest effective corporate income tax rates among the EU Member States, and raising the standard corporate income tax rate to 17 % would not significantly affect this ranking. ‘In 2023, Lithuania ranked 23rd out of 27 EU Member States, with an effective rate of 12.4 % (based on a nominal corporate income tax rate of 15 %), while Latvia ranked 18th with an effective rate of 16.5 % and Estonia ranked 20th with an effective rate of 15.7 %. Adding two percentage points to Lithuania’s rate to reflect the proposed 17 % nominal rate in 2026 would move Lithuania to the 22nd place in the ranking,’ the document states.

The amendments also provide for an immediate deduction of the acquisition cost of certain fixed assets, as an incentive for business investments that enhance productivity. In addition, deductions will be permitted for grants paid under trilateral agreements to students in natural sciences, technology, engineering or mathematics, and for scholarships granted to researchers working on research and experimental development (R&D) projects, thereby promoting advances in high-technology and innovation.

The amendments to the Law on Corporate Income Tax were adopted by 96 votes in favour, with 19 votes against and 8 abstentions.