|Arm’s length principle||Arm’s length principle applies.
The corporate income tax base should reflect arm’s length prices in case of related party transactions. Should the parties apply prices that are not in line with the principle, the corporate income tax base should be adjusted accordingly.
|Related parties||Direct or indirect control of more than 25% based on control/voting rights; close relatives, shareholders and management members should be considered.
Foreign entity and local PE; two entities where one has a right to take decisions at the other.
International transactions are covered
|Domestic transactions are covered?||YES
Domestic transactions are covered.
|The local legislation follows the provisions of the OECD TP Guidelines||YES
The local TP legislation is based on OECD TP Guidelines, however, the local legislation provides that the tax payer may refer to OECD TP Guidelines if these are in line with local legislation requirements.
|Safe Harbour rules||N/A|
|Advance Pricing Arrangement (APA)||To be available since 1 January 2012. The request should be submitted to the Tax Authority for future transactions. APA may be asked for the current and following 5 calendar years. The deadline of issuing the APA by the Tax Authority is 90 days which may be extended by 60 days.|
|Right of the tax base adjustment for the tax payer||YES
The right to adjust the base is not only the right of the Tax Authority, but it is available for the tax payer as well. It means that the prices may be up to the tax payer, but the the tax base should be adjusted accordingly to the arm’s length price. Increasing is a must, decreasing is an option.
|Penalties / Deviation from the arm’s length price||NOGeneral penalties will apply.|
Lack of proper TP documentation
General penalties will apply.
|Documentation requirements||YES, since 2004
Documentation should be prepared for all related party agreements (including minor and domestic transactions). Documentation must be prepared by the entities which annual turnover exceeding EUR 2,896,200.
|Deadline for preparing TP documentation||To be presented within 30 days from the request of the tax authorities.|
|Acceptable methods, priority||Priority to traditional methods
TNNM and profit split methods are listed in the law too, however these may apply if traditional methods (CUP, cost plus, resale minus) cannot be applied.
|Language||May be prepared in any foreign language, but official Lithuanian translation needs to be made available on request of the tax authority.|
|Benchmarking||International (EU) comparables are generally accepted.|