Birškytė, Liucija

This article explores the impact of government financial support on the financial performance and other indicators of small businesses in Lithuania. To achieve the objective of the paper both survey method and statistical analysis are used. Research results provide evidence that there exists a statistically significant relationship between the magnitude of financial support and the financial indicators of SMEs. The impact of financial support on business performance in selected areas is stronger with an increase in the size of SMEs. This paper contributes to a better understanding of what kind of financial support and what features of aid recipients make the financial support more effective in the context of Lithuania's specific business and institutional environment.

It can be argued that the potential of the real property tax as an important source of local government revenue has not been fully exploited in Lithuania. Much has been done to improve the quality of real property assessments. Both buildings and land taxes are ad valorem taxes and the standard for assessment is a true market value. Mass valuation methods are used and the tax base of all property has to be reassessed every five years.The information on the value of property is easily accessible. In the case of discrepancies between the value produced by mass valuation and an individual valuation, the taxpayer has a right to appeal. In order to have a more productive and »equitable« real estate tax, several improvements are possible. The unification of taxation rules for real estate property (buildings and other structures) and land under a single law would produce a more transparent, simpler tax system that would also be easier to understand and administer. At the same time, the tax base could be broadened by eliminating many of the abundant exemptions and other concessions. In addition, policy makers should set the threshold for the taxation of residential real property that would be both socially just and which would generate revenue at socially acceptable and economically feasible rates.

To be useful for decision-making accounting information needs to be of high quality. This article examines how tax accounting rules may impact the accuracy and reliability of the information contained in financial statements. The simulation model reveals that significant distortions occur in accounting information due to the choice of depreciation period and methods. Using as benchmark ratios calculated applying accounting policy recommended in Business Accounting Standards a significant divergence between ratios has been found. This finding implies that ratios calculated using accounting rules allowable for Corporate Income Tax calculation can provide misleading information and lead to unsound financial management decisions.

The objective of this paper is to find evidence whether Lithuanian municipalities use new technologies to disclose all relevant budget information in a timely, systematic, and comprehensive manner. The article creates a budget transparency index for each municipality using criteria from theory and previous research and then builds an empirical model to identify what determining factors make the budget process more transparent in some municipalities than in others. The results show that the percentage of population living in rural areas and turnout at local elections are negatively related to budget transparency while the level of debt is positively related to the level of transparency. The findings also provide evidence that revenue per capita and level of intergovernmental grants are negatively related to budget transparency. The research contributes to the existing literature by adding Lithuania to the relatively small set of countries that have developed budget transparency indices for subnational governments.

The purpose of this chapter is to review the latest developments in corporate income tax (CIT) focusing on its international aspects and associated distortions. In this endeavor, the chapter draws on evidence provided by the leading tax experts as well as on the profound and rigorous research produced by academia. This chapter examines and synthesizes research on tax competition, relationship between tax rates and foreign direct investment (FDI), and tax avoidance as a result of diferential tax regimes. Trends in the development of CIT are discerned using statistical data provided by OECD and European Commission. Numerous studies done on global, regional, and country-speciic datasets support the premise that indeed tax competition for capital exists though the magnitude of efects varies. There is also enough evidence that tax avoidance and evasion through base erosion and proit shifting persist for some time and may be on the rise.

Companies in Lithuania have to follow Business Accounting Standards (BAS) when preparing their financial statements. Recording financial transactions according to BAS ensures that the information a company shares with potential lenders and investors gives a true and fair view of its business situation. However, the tax law prescribes its own set of accounting rules, which can result in a difference between what a business shows in financial statements and what it reports on its tax returns. This paper examines whether Lithuanian companies predominantly use tax accounting principles that migrate into their financial statements to create an inaccurate picture of business performance. The method of experts’ evaluation was chosen for that purpose. The results indicate that Lithuanian companies tend to heavily rely on accounting principles prescribed in corporate income tax law thus distorting information contained in financial statements. The paper contributes to the scarce literature on this issue of high relevance to both academics and practitioners.

Each year, multi-billion amounts of tax revenue is lost all over the European Union. Due to its specif- ic nature, VAT is vulnerable to il- legal manipulation in several ways. Within time, different fraud meth- ods were identified, revealing the organized networks of tax fraud and exposing the techniques be- neath them. Gathered intelligence enabled the responsible authori- ties and institutions to develop new strategies and measurements of de- tecting and preventing VAT fraud, as well as improving present tools. The carried out research has shown that information exchange deficien - cies among EU Member States has been a long-discussed issue. Three main disadvantages were distin- guished in the exchange of infor- mation between EU Member States in the VAT field. First of all, infor - mation stored in the VIES system is not always reliable or received on time. Secondly, information is not updated fast enough due to the fact that procedures provided in EU legislation are not effective enough. Thirdly, the exchange of informa- tion on questionable transactions between EU suppliers is not suf- ficiently fast or intensive. Thus, it can be stated that the current data exchange scheme is not effective and the entire chain is not visible “from above”, therefore it is rather difficult to identify frauds quickly. It is necessary to apply a new and in- novative approach to the exchange of information both within EU and outside of it. An approach and investigation “from the top” having all the infor- mation is very necessary. Only a smart tax administration system including the information of all tax- payers of EU Member States with - out any exceptions will enable to promptly track down VAT fraud. Discussions revealed that taxpay- ers are becoming more cunning and are carrying out long-chain frauds on an international level, which are quite hard to track down prompt- ly “here and now” when not all the information from other Member States is received. The best method for information collection in the system would be if all natural persons and legal en- tities carrying out business activi- ties would provide their complete accounting data, and the tax ad- ministrator would upload, manage and process such data. If all the aforesaid data was collected in a centralized way on the level of the entire EU, then the cross-checking algorithm used in the verification system would help find the early stages of possible frauds quickly and effectively. There are, of course, certain risks, however they are sig- nificantly lower than when acting on a local level, due to the fact that cross-checking and inspection functions are not carried out in real time, but may take several weeks to complete. Such time lags result in the fact that some companies can issue large quantities of fraudulent VAT before closing. [...]

Small-and-medium size enterprises (SMES) are considered to be a key to economic development, and market completion. Small businesses are also a crucial source of innovative potential and job creation. In the aftermath of the recent economic crisis many countries experience high unemployment rates. A strong small business sector can provide employment opportunities and contribute to economic growth and speedy recovery. Though the creation of small firms and self-employment is ostensibly encouraged in formal government policies, in practice small businesses are affected by multitude of barriers, both formal and informal. This study explores the relationship between the level of formal barriers such as taxation, accounting requirements as well as other relevant regulations, and the likelihood of small business creation and survival in Lithuania. It uses statistical data, legal documents, and experts’ evaluations to determine the regulatory burden experienced by small businesses. The results of the research indicate that regulatory requirements are significant factors in small business formation and performance. Findings of the paper contribute to a better understanding of how entrepreneurship happens and how policy makers could shape their policies to effectively encourage small business formation and sustain their operations medium and long-term.

Small-and-medium size enterprises (SMES) are considered to be a key to economic development, and market completion. Small businesses are also a crucial source of innovative potential and job creation. In the aftermath of the recent economic crisis many countries experience high unemployment rates. A strong small business sector can provide employment opportunities and contribute to economic growth and speedy recovery. Though the creation of small firms and self-employment is ostensibly encouraged in formal government policies, in practice small businesses are affected by multitude of barriers, both formal and informal. This study explores the relationship between the level of formal barriers such as taxation, accounting requirements as well as other relevant regulations, and the likelihood of small business creation and survival in Lithuania. It uses statistical data, legal documents, and experts’ evaluations to determine the regulatory burden experienced by small businesses. The results of the research indicate that regulatory requirements are significant factors in small business formation and performance. Findings of the paper contribute to a better understanding of how entrepreneurship happens and how policy makers could shape their policies to effectively encourage small business formation and sustain their operations medium and long-term.