L i t h u a n i a Loreta Ramanauskienė Lecturer of Klaipėda Business school
Population, territory • General statistic information • Economy • Export and import • Taxation
LITHUANIA – an independent republic in the Central Europe • 65 000 sq km • Population – about 3,3 million • Borders with Latvia, Belarus, Poland and Russia • Main cities – Vilnius, Kaunas, Klaipėda
Lithuanian brief history (1) • First mentioned in a medieval German manuscript on 14 February 1009 • During the early period (1316 – 1430) Lithuania occupied the territories of present-day Belarus, Ukraine, parts of Poland and Russia. By the end of the fourteenth century Lithuania was the largest country in Europe • Lithuanian people accepted Christianity in 1386.
Lithuanian brief history (2) • Polish-Lithuanian Commonwealth, the largest country in 17th-century Europe, was formed in 1569 • In 1795 by the third Partition of the Commonwealth ninety percent of Lithuania was incorporated into the Russian Empire • Lithuania re-established its independence on February 16, 1918 • In 1940 the Stalin’s Soviet Union occupied and annexed Lithuania and 46 years of Soviet occupation ended in the late 1980s. • Lithuania proclaimed its renewed independence on March 11, 1990 • On March 29, 2004, Lithuania became a NATO member, and on May 1, 2004, Lithuania joined the European Union.
Political situation • The Lithuanian head of state is the President. Main policy functions however include foreign affairs and national security policy. The president is also the military commander in-chief. • The Lithuanian parliament, the Seimas, has 141 members.
About the World Audit company • The company World Audit brings together statistics reports from highly respected agencies: Freedom House, Transparency International, Amnesty International, Human Rights Watch, The International Commission of Jurists. From their admirable work company presents and update the World Democracy Audit. • Their reports monitor and rank every one of the 150 nation states withpopulations inexcess of 1 million – thus 99 % of the world’s population. • World Audit is in an international not-for-profit company, registered in England. Aim – to provide a truly global geopolitical perspective because the company believes that corruption, human rights and press censorship in ANY country should be publicised to as wide an audience as possible( to present the information as wide an audience as possible ) • www.worldaudit.org
World Democracy Audit rankings (150 countries)last audit – November 2009 TOP 10 Democracy rank: Denmark (1), Sweden (2), New Zealand (3), Finland (4), Switzerland (5), Netherlands (6), Norway (7), Canada (8), Australia (9), Ireland (9)
Vilnius – the capital city with population about 554 000 (1.4 million with Vilnius County)
Vilnius was first mentioned in written sources in 1323.The Europen Capital of Culture in 2009 – the year, marking Lithuanian’s Millennium.The old town in Vilnius, the biggest in Eastern Europe, has been involved into the UNESCO World Heritage List since 1994.
Trakai – in the XIII century was as the state centre of Lithuania. Grand Duke Gediminas found a beautiful place and decided to build a castle here.Trakai is a town near Vilnius, built on water and sorounded by many lakes.
Klaipėda (Memel) – the third city of Lithuania. Population about 238 000 inhabitants. Klaipėda city is situated along the shores of the Baltic Sea and the Curonian Lagoon.
Klaipėda was found in 1252 after Livonia Order. Now Klaipėda is an important economic, politic and cultural area.Every summer the city becomes the “summer capital” of Lithuania.
Ranks of GDP per capita in $ by the CIA World Factbook (Central Intelligence Agency),2009 • 1 – Liechtenstein: 122 100 • 2 – Qatar: 121 400 • 4 - Norway 59 300 • 8 – United States: 46 400 • 16 – Netherlands: 39 000 • 21 – Belgium: 36 600 • 25 – Finland: 34 900 • 39 – Czech Republic: 25 100 • 48 – Estonia: 18 800 • 56 – Russia: 15 200 • 57 – Lithuania: 15 000 • 61 – Latvia: 14 500 • 78 – Turkey: 11 200 • ……. • 193 – Zimbabve: 200 Source: www.cia.gov
GDP at market prices, Euro per inhabitant Source: Eurostat database
GDP in Lithuania Source: Statistics Lithuania
Specific weights used in the calculation of CPI December 2008, per cent( CPI – the consumer price index ) Source: Statistics Lithuania
FDI at the beginning of the year by country, LTL thousand Other countries (2009): USA (817056), United Kingdom (666313), Luxembourg (792285), France (710646), Switzerland (693481) and others. Source: Statistics Lithuania
Lithuanian direct investors abroad at the beginning of the year 2008 by country, number of investors Source: Statistics Lithuania
8 commercial banks holding a license from the Bank of Lithuania Total licensed banks profit for 2007 – LTL 1141.2 million; for 2008 - LTL 875 million ( decreased about 23 %). Foreign bank branches in 20008 had loss of LTL 7.7 million.
Furthermore 8 foreign bank branches and 4 foreign banks representative offices operating in the country. • Foreign Bank Branches: • Nordea Bank Finland Plc (Finland); • AS “UniCredit Bank”; • MP Investment Bank hf. (Iceland); • Balti Investeeringuti Grupe Pank (Estonia); • Allied Irish Banks (Ireland); • Skandinaviska Enskilda Banken (Sweden); • Danske Bank A/S bransh; • Swenska Handelsbanken (plans to start activity in 2009) • Foreign Bank Representative offices: AB RIETUMU Banka (Latvia); AP Anlage & Privatbank AG; Balkan Investment Bank AD Banja Luka; Raiffeisen Bank Polska S.A.
Outgoing tourism Number of travels, thousand Source: Statistics Lithuania Main destinations in 2008 and 2009 were: Belarus, Poland, Germany. About others: travels to Norway in 2008 period grew 2.9 times, to Ireland – 2.5 times, to United Kingdom – 65 %. Another situation in 2009 same period: travels to Ireland declined 68 %, to United Kingdom – 32 % and to Latvia – 20 %.
Foreign trade compare respectively periods 2009 and 2008LTL Million In compare January – August 2009 to 2008 export decreased by 32.3 per cent, import – 42.7 per cent.
In general, there is no discrimination in Lithuania between foreign and local investors. Nevertheless, any investment is prohibited in businesses connected with the national security of Lithuania. Similarly, investments by foreign investors in holding companies of lotteries is prohibited. In some activities, such as pharmacy, the import and export of tobacco, oil and more, a special license is required. Investment environment
Methods of Investing Investors may invest in the Republic of Lithuania by using any of the following methods: 1) by setting up an economic entity, acquiring the capital of an economic entity registered in the Republic of Lithuania or a share therein; 2) by acquiring securities of all types; 3) by creating, acquiring long-term assets or increasing the value thereof; 4) by lending funds or other assets to economic entities, in which the investor owns a share in the capital enabling it to control the economic entity or to exert a considerable influence over the economic entity; 5) by implementing concession contracts and contracts of financial lease (leasing).
Promotion of Investment Investment shall be promoted by the following methods: 1) the investors shall be granted tax incentives determined by appropriate tax laws. 2) personnel retraining costs shall be covered in part or fully in the manner specified by the Government of the Republic of Lithuania or an institution authorised by it; 3) Lithuanian and foreign creditors who have granted loans for the execution of investment projects shall be given state and municipal guarantees according to the procedure established by he laws of the Republic of Lithuania;
4) the repayment to the banks of loans intended to be used by economic entities for financing the execution of investment projects may be secured by the guarantees offered by the guarantee institutions set up by the Government or the guarantees offered by insurance undertakings or by insurance of the loans; 5) investment contracts worth at least LTL 200 million ( about EUR 58 million ) and meeting the criteria set by the Government of the Republic of Lithuania, shall be implemented in accordance with special terms and conditions of investment and business set in the said contracts;
6) contracts for the investment of not less than LTL 20 million ( about EUR 6 million ) and, in the districts where the unemployment level is above the national average officially announced by the Department of Statistics under the Government, not less than LTL 5 million ( about EUR 1.5 million), shall be concluded with special terms and conditions of investment and business set in the contracts, 7) contracts for investment in municipal infrastructure, production or service area, which meet the criteria set by the municipal council shall be concluded by the municipality. Special terms and conditions of investment, business or choice of a land plot shall be established in such contracts according to the competence of municipality;
8) in the cases specified by laws of the Republic of Lithuania state-owned land shall be leased to the investor without holding an auction; 9) the infrastructure shall be created (up to the boundaries of the land plot allotted to the investor) with the state/municipality resources following the procedure established by the Government of the Republic of Lithuania or an institution authorised by it.
Types of companies: Public or private limited liability company Individual enterprise Partnership (general or limited) State enterprise Municipal enterprise Agricultural company Cooperative company European company European cooperative society European economic interest grouping
Taxation Lithuania has concluded applicable bilateral treaties with 44 countries on avoidance of double taxation Enterprises registered in Lithuania must pay taxes in Lithuania on profits and capital gains earned both in Lithuania and abroad. The financial and tax year coincides with the calendar year. The standard profit tax rate ( corporate tax rate) applied to legal entities is 15 % from the beginning of this year. Tax losses may be carried forward for 5 years. The personal income tax rate is 15 %, except for dividend income which is taxed at 20 %. Many tax exemptions for individuals have been cancelled or reduced.
The standard value-added tax (VAT) rate is 21 % from September 2009. 5 % - till the end of 2010 for some medicine and medicine products 9 % - till 31st of August 2010 for construction, renovation and heat isolation, covered by the states and municipal budgets 9 % - till the end of 2010 for books and non periodical publications Each employee must be issued a social insurance certificate. The employer deducts 9 % from the employee’s gross salary as the social insurance contribution paid by the employee. Most of the employers must also pay social insurance contributions equal to about 31 %.