On 7 June 2005, the Seimas approved three tax laws, which implement the new and highly debated tax reform.
I. The Temporary Law on Social Tax
The Temporary Law on Social Tax imposes an additional 4 percent tax on the profit of legal entities for the year 2006, and a 3 percent tax for the year 2007. The purpose of this temporary taxation is to minimize negative effects of reducing individuals’ income tax on the state budget and in particular to ensure further financing of social programs and means for the reduction of poverty and enhancement of social cohesion. The elements of taxation under the Temporary Law on Social Tax are mainly the same as those established by virtue of the Law on Profit Tax (e.g. taxpayers, tax basis, taxation period, etc.).
