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Investor's Legal Brief, September 2017

  • Lithuania
  • Other

26-09-2017

AMENDMENTS TO THE PUBLIC PROCUREMENT LAW

The new regulation of the Public Procurement Law encourages contracting entities to select the most economically advantageous tenderer, reduces in-house transactions, and establishes more flexible rules on changing procurement contracts.

New restrictions for internal transactions

Upon entry into force of the new amendments, the conclusion of internal transactions is possible only with the other contracting authority (contracting entity) and only in exceptional cases, under strict conditions on turnover, control and non-participation of private capital. Meanwhile, State enterprises, public limited liability companies and private limited liability companies, in which State-owned shares give more than half of the votes in the general shareholders' meeting, will no longer be able to enter into internal transactions.

Preference is given to economic efficiency


The new regulation limits the scope of purchases in which provided offers are evaluated using the lowest price criteria. Also contracting authorities / contracting entities are encouraged to select the most economically advantageous offers in public procurement. The most economically advantageous offer will be selected according to ratio of the price, cost and quality. Procurement carried out by applying price criterion, will not be able to make up more than 70% of the total value of the contracting authorities / contracting entities’ procurement in each calendar year (except for low value purchases).

More flexible rules for changing and terminating purchase agreements

According to the new regulation, in order to amend the purchase or preliminary agreement the consent of the Public Procurement Office is no longer required. Purchase or preliminary agreement can be amended:

•    according to the review conditions provided in the agreement;
•    when it is necessary to purchase additional works, services or goods from the same supplier, that were not included in the initial purchase. The individual amendment of the agreement cannot exceed 50 % of the original contracts value, and the total value of individual amendments cannot exceed 100 % of the original contracts value;
•    when the need for amendment has arisen due to circumstances that could not be foreseen. The individual amendment of the agreement cannot exceed 50 % of the original contracts value, and the total value of individual amendments cannot exceed 100 % of the original contracts value;
•    when a party to an agreement is replaced by a new one due to the reorganization, liquidation, restructuring or bankruptcy of a supplier and after the new supplier has taken over the obligations of the previous supplier;
•    when the amendment, regardless of its value, is not material, i.e. amendment which could lead to the winning of another supplier or the economic equilibrium would change for the benefit of the supplier or would significantly extend the scope of the purchase agreement.

New rules for changing and terminating purchase agreements will also be applied to those agreements that were concluded before the new regulation came into force, however the purchase agreement can be amended only during its term of validity.

The new amendments came into force on 1st of July, 2017.

THE APPLICATION OF THE TAX RELIEF FOR FEZ ENTERPRISES WILL BE ASSOCIATED WITH THE FACT OF THE REAL ACTIVITY OF THE ENTERPRISE EVEN WHEN THE FEZ MANAGEMENT COMPANY IS NOT YET ESTABLISHED.

The amendment to the Law on corporate income tax (CIT) will come into force on 1st January 2018, and will grant a tax relief based on real activity of the enterprise even when the FEZ management company is not yet established.

On 27th of July, 2017 the new amendment on CIT Law was adopted, which will extend the application of corporate income tax reduction to FEZ enterprises.

Upon the entry into force of this amendment, the application of the tax relief to the FEZ enterprises will be related to the fact of the real business activity of the enterprise, i.e. this privilege will be applied to enterprises located and commercially operating in the territory of the FEZ, even when the FEZ management company is not yet established.  

The new amendments will come into force on 1st of January, 2018.

CERTAIN IMPLEMENTING ACTS OF THE LABOR CODE WERE APPROVED

The Government approved inter alia the rules on conclusion, amendment and termination of a seasonal employment contract, characteristics of the hours of work and rest, as well as remuneration for work, in line with provisions of the new Labor Code.

The new regulation supplements the list of seasonal works, which includes such works as construction, land management, agriculture, forestry and other works, when they are not operated during the whole year.

The new regulation also amends the rules on characteristics of the hours of work and rest, which specifies that the minimum duration of special breaks within an 8-hour working day (shift), must be at least 40 minutes. The breaks are also provided when employees work under professional risk conditions, as well as hard physical work or work which requires high levels of mental tension.

The new rules came into force on July 1, 2017 and replaced regulation that was previously in force, and will no longer be applied.

LITHUANIA WILL REQUIRE DOCUMENTS ISSUED IN BELARUS TO BE CERTIFIED WITH APOSTILLE

From September 1st this year, documents issued in Republic of Belarus will have to be certified with apostille, except for certain documents specified in Agreement between the Republic of Lithuania and the Republic of Belarus on legal assistance and legal relations in civil, family and criminal cases.

The Ministry of Justice of Republic of Lithuania has informed the Migration Department that from 1st of September, 2017 the Republic of Lithuania will not require to approve with Apostille only those official documents issued by the Republic of Belarus, which are provided in the Agreement between the Republic of Lithuania and the Republic of Belarus on Legal Aid and Legal Relations in Civil, Family and Criminal Matters (such as testaments, documents on personal, family situation, income and assets of the person, etc.). Thus, from 1st of September, 2017 official documents compiled and issued in the Republic of Belarus and not falling within the exemption, when applying for a temporary or permanent residence permit in Lithuania, a visa, citizenship of the Republic of Lithuania, will have to be certified with the Apostille.
 
LITHUANIA SCORES IN THE TOP 10 RANKING OF GREENFIELD INVESTMENTS INDEX

Lithuania was ranked in the top 10 of the global greenfield investment index, which was composed by fDi Intelligence, the Financial Times data unit. In the ranking of developing European countries, Lithuania was ranked third in attracting direct greenfield investments.

In 2016, 94 countries, attracting at least 10 greenfield projects were evaluated in the index.

The index was compiled after estimating the countries’ attractiveness to greenfield foreign direct investment, taking into account the GDP of the countries. Of the 94 countries listed in the fDi Intelligence index, the index of 68 countries was above 1, meaning that their share of greenfield investments from the global volume of such investments exceeded their GDP share in global GDP.

The index of Lithuania is 6,62. The index is formed third year in the row by fDi Intelligence.

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