Lithuania's State Tax Inspectorate opened public consultation on two new draft guides covering arm's length range construction and transfer pricing documentation for controlled transactions, with comments due by 14 August 2026.
The Lithuanian State Tax Inspectorate (STI) has opened a public consultation on draft guides for transfer pricing documentation and establishing the arm’s length range on 13 July 2026. The Q&A-style guides reflect the most common compliance issues identified by the STI and the questions most frequently asked by taxpayers.
The submitted draft publications are Constructing the Arm’s Length Range and Transfer Pricing Documentation for Controlled Transactions.
The consultation is set to conclude on 14 August 2026.
Constructing the arm’s length range
This draft compliance guide outlines the official position of the Lithuanian tax administrator regarding the arm’s length range, a statistical tool used to verify if prices in controlled transactions match market conditions.
The arm’s length range is a set of values, rather than a single price point, used to assess whether intercompany transactions comply with the Arm’s Length Principle. The guide details how to construct this range using comparable data, typically favouring the interquartile method to remove extreme outliers that could distort results.
Taxpayers are generally encouraged to use three-year data averages to account for economic cycles, though they may adjust this timeframe based on specific circumstances like the COVID-19 pandemic.
The guidance clarifies that while multiple pricing methods can be used to improve accuracy, the primary goal is to ensure the resulting range is homogeneous and narrow. Furthermore, it explains that if a transaction’s actual profit falls outside the established range, it must be adjusted, usually to the median, which serves as a central point of reference during tax audits.
Ultimately, these answers serve as a practical framework for transfer pricing documentation, emphasising the taxpayer’s responsibility to justify their chosen statistical methods and data selections.
Transfer pricing documentation for controlled transactions
This draft compliance guide serves as a comprehensive guide for Lithuanian taxpayers regarding the documentation requirements for controlled transactions between associated parties. It clarifies that pricing documentation is structured into two main parts: a Master File, providing a global overview of the corporate group, and a Local File, detailing specific domestic transactions.
The guidelines specify that companies must prepare these files if they exceed certain revenue thresholds or engage in transactions valued over EUR 90,000, with stricter rules applying to entities in tax havens. Transfer pricing documentation rules set revenue-based thresholds for preparing a Master File (EUR 15 million group revenue) and Local File (EUR 3 million local entity revenue), with exemptions covering domestic transactions and those below EUR 90,000.
While the documentation is not automatically submitted to the tax administrator, it must be maintained for at least five years and produced within thirty days upon official request. Failure to comply can result in administrative fines, increased tax assessments, and the loss of “reliable taxpayer” status.
Non-compliance carries administrative fines of up to EUR 6,000 for repeat offences, tax adjustments pegged to the arm’s length range median, and the loss of reliable taxpayer status.
