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Lithuania's Tax Burden Too Low, Says IMF

by Ulrika Lomas, Tax-News.com, Brussels

12 July 2017


Lithuania should boost tax revenues by improving tax administration processes and repealing special tax schemes, the International Monetary Fund (IMF) has said.

In its latest report on the Lithuanian economy, the IMF noted that Lithuania's tax-to-GDP ratio is one of the lowest in Europe, with about half of the difference relative to the EU average due to tax administration shortcomings and the shadow economy. Another 40 percent "can be traced to low tax rates or the absence of certain taxes," the IMF observed.

It said that the country should consider introducing "selected tax policy measures," particularly for personal and corporate income tax.

"In terms of tax policy, personal and corporate income tax rates are low and riddled with special schemes," the IMF said. "Wealth and capital income are lightly taxed, especially capital gains in real estate transactions."

It was observed in the report that in early June, after the conclusion of the IMF mission, Lithuania's government opened a public consultation process on tax reforms aimed at reducing the burden on low-income earners and families, streamlining special tax regimes, and incentivizing startups.

TAGS: Wealth | tax | International Monetary Fund (IMF) | corporation tax | tax reform | Lithuania

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