Lithuania is to attract IT, business process outsourcing, financial and other services enterprises to free economic zones (FEZs). Due to decision of Parliament of the Republic of Lithuania capital investment of service companies will have to exceed EUR 100 000 and employ at least 20 full time employees to receive incentives.

Small service enterprises operating in free economic zones (FEZs) and fitting capital investment and employment requirements will be also allowed not to pay income tax for six years.Before the amendment to the law, companies in order to get FEZ tax incentives, have to invest at least EUR 1 million.

After a due initial incentives period, companies, which qualified for corporate tax exemption, will be able to pay reduced income tax by half for another 10 years.

Starting from 2017, regulatory changes will allow services companies to establish operations and benefit from the tax incentives in FEZs. While FEZs are first and foremost tailored for manufacturing companies, such changes will create more favourable investment environment for small companies in Lithuania as well. Therefore, Lithuania FEZs will become even more competitive in the Central and Eastern Europe region.

The newly adopted tax benefits start applying only after company receives auditor’s certification regarding the investment. Also, tax benefits can be applied by companies delivering accounting, administration, human resources, architectural and engineering services and related technical consulting services, but at least 75 per cent of company’s revenue must come from aforementioned activities in a given fiscal year