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HomeLithuaniaLithuanian ministry proposes funding defense via corporate, insurance, excise tax hikes

Lithuanian ministry proposes funding defense via corporate, insurance, excise tax hikes

The Lithuanian Finance Ministry on Tuesday proposed to raise additional funds for defense by increasing the corporate tax rate by one percentage point, hiking excise duty on fuel, and introducing a tax on some insurance contracts.

The proposed 1 percentage point hike in the corporate income tax rate, which currently stands at 15 percent, would only be reflected in the 2026 budget. To ensure extra defense funds for 2025, the ministry suggests extending the temporary bank solidarity levy for a year.

The package also calls, among other measures, for increasing the reduced corporate tax rate for small businesses from 1 percent to 6 percent, and scrapping the special corporate tax regimes for the insurance and health sectors.

Apart from an additional plan to increase excise taxes over the next three years, the ministry proposes to raise excise taxes on all types of fuel by 6 euro cents (excise duty and value added tax).

Additional funds are to be raised by introducing a 10 percent levy on insurance contracts, except for life insurance and personal liability insurance.

The Finance Ministry estimates that these proposals will allow boosting defense funding to around 3 percent of GDP by 2030.

Allocations for national defense are being increased to speed up the development of the planned military division and to host Germany’s brigade.

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)

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