Binding rulings and advance pricing agreements introduced in Lithuania

February 15, 2012, 10:00 / Advisory / Jurisdiction: Lithuania, Source: PWC

In October 2011 the Lithuanian Tax Authority under the Ministry of Finance of the Republic if Lithuania approved the rules on filing an application for a biding ruling or APA, “Examination of applications, decision making und change”.

Based on the amendments to the Lithuanian Law on Tax Administration of 23 November 2010 and provision of the above-mentioned rules, as of 1 January 2012 it is possible for tax payers to apply for a binding ruling or APA from the Lithuanian Tax Authority in respect of the future transaction.

Decisions in the form of abiding ruling or APA will be issued by the Lithuanian Tax Authority regarding the application of tax legislation provisions and pricing principles for future transaction. The above-mentioned decision will be particularly relevant to companies planning to undertake new transactions where the taxation principles of such transactions are not clearly defined in the tax legislation. Moreover, APAs will be particularly relevant to international companies planning to perform significant transactions with associated parties.

Introduction of binding ruling and APAs should assist with clarity and assurance in terms of taxation and pricing at the planning stage a transaction.

The main provisions of the rules

The approved rules define the process of application for a binding ruling and APA, subjects on which the binding rulings or APAs may be issued, the time frame for application examination and decision making and case when the binding ruling or APA may be terminated or amended.

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