Lithuania’s parliament has approved a resolution to establish the State Defense Fund, but to achieve this goal, the parliament has raised the corporate tax rate and excise duties on alcohol, cigarettes and fuel, and enacted the Defence Fund Law.
The Lithuanian President Gitanas Nauseda signed amendments to the Law on Corporate Income Tax, raising the standard corporate income tax (CIT) rate from 15% to 16% on 28 June 2024. The legislation also introduces a one-year corporate tax holiday for start-ups with up to 10 employees and annual income under EUR 300,000. Following this initial year, these businesses will be subject to a 6% tax rate, increased from the current 5%.
Aligning with NATO countries’ Lithuania pledges to raise defence spending to 3% of GDP. The Defence Fund will be utilised to gather resources for addressing the most pressing needs in national defence capabilities and enhancing civil protection.
Finance Minister Gintarė Skaistė said, “This is the best investment in peace.”
Parliament decided that local governments would contribute EUR 25 million annually to civil protection projects from their share of personal income tax proceeds.
The changes will become effective from 1 January, 2025.
