About  75% businesses do not use existing tax relief schemes and pay more income tax than they should. Currently in Lithuania there are 2 tax relief programs for businesses that invest in R&D and one for the companies that invest in renewal of their technological base.

„A significant number of companies and industry clusters that run R&D projects are simply not aware or have not sufficient amount of information about advantageous tax environment for them in Lithuania.  According to one of the latest government audit reports, about one fifth of companies do not apply for tax relief because they are not sure if they comply with criteria for R&D activities”, commented Mantas Biekša from Agency of Science, Innovation and Technology (MITA).

First step – to identify R&D

How much a company can save by using a tax relief, mostly depends on the scope of R&D and its expenses. In addition, only those companies that meet R&D criteria for tax relief can declare it. M. Biekša urges companies and their administrators who are not sure whether company’s activities qualify or not as R&D to submit evaluation request to MITA. He says that MITA will provide expertise and conclusions free of charge. Filling out the request for this type of evaluation is possible at any time.

Frascati guide

„Frascati guide” is one of the main documents in European Union about R&D resources and their administration. Instead of submitting request for evaluation to MITA, with the help of this guide companies can determine if they meet required criteria themselves.

M. Biekša points out, that in the newest edition of this guide the definition of experimental development was expanded. It is described as not only the outcome of scientific research, but also the usage of practical know-how in order to create new products, services and knowledge. This is especially important, because it allows for more companies to qualify for the associated tax relief programs.

Clusters and R&D tax relief

Members of clusters that work with R&D projects can also apply for the tax relief. In this case each individual member has to declare their personal expenses that it used for R&D activities. „InoLink“ specialists invite coordinators of clusters to consult with them on all the matters regarding possible tax reliefs. During these free of charge consultations coordinators can receive detailed information about how to use tax reliefs, criteria, process etc.

„InoLink“ is a project coordinated by MITA and implemented together with Lithuanian Innovation Center. The goal of the project is to promote clusterisation, maturity of clusters and  their integration to international value creation chains. Project is funded from European regional development funds.