Lithuania to Increase Fines for VAT Breaches

On 13 December 2022, Lithuanian Parliament amended Article 123 of Law No IX-751 on Value Added Tax of the Republic of Lithuania which specifies the fine sizes for VAT compliance breaches. The changes are finally coming into power on 1 May 2023, as planned.

The amendment changes the liability for non-compliance with the VAT payment procedure when the business owner reports a lower VAT amount than should be payable based on the transaction data. The penalty increase also applies to cases when a company does not register for VAT on time and files to collect, report, and pay the tax.

With the update, penalties will be increased two-fold. Instead of the current penalties that range from 10 to 50 per cent of the amount of the additional VAT due in case of reported reduced VAT amount or the total VAT due when a company fails to register for VAT, penalties of 20 to 100 per cent of the amount of the calculated VAT due will apply to people who commit VAT breaches.

The fines and their administration are the responsibility of the Lithuanian tax administrator — tax inspectorate (VMI). The previous lower penalty rates are applied until 30 April 2023.

Corporate Tax