Lithuania Issues Draft Pillar Two Law & Confirms Postponement

On October 27, 2023, Lithuania’s Ministry of Finance issued a draft law to implement the EU Minimum Tax Directive (along with a Draft Law on the Amendment of Article 589 of the Code of Administrative Offenses).

However, as Lithuania intends to delay the application of the GloBE rules under Article 50 of the EU Minimum Tax Directive, the draft law is not comprehensive and only covers limited aspects of the GloBE rules (as required for the application of Article 50). 

Article 50 of the EU Minimum Tax Directive provides that EU Member States in which no more than 12 UPEs of in-scope MNEs are located may elect not to apply the IIR and the UTPR for up to six consecutive fiscal years beginning from 31 December 2023 (ie until January 1, 2030). 

Member states that have postponed the application of these rules must incorporate part of the provisions of the EU Minimum Tax Directive into national law in such a way as to ensure the operation of the GloBE rules in the EU, as established by the EU Minimum Tax Directive.

The Lithuanian draft law, therefore, only transposes the necessary aspects of the EU Minimum Tax Directive.