Parliament increases corporation tax to 17%.

After its adoption, the Parliament agreed to raise corporation tax on business by 1% point from next year to 7% or 17%, depending on the size of the company.

On Tuesday, 96 MPs voted in favour of the amendments to the Corporate Income Tax Law, 19 against and 8 abstentions, while amendments to the Tax Administration Law were also approved.

According to the government's proposal, the corporate income tax rate for large companies will be 17% from 2026, while the preferential rate for small and medium-sized enterprises with annual revenues of up to €300,000 will be 7%.

The corporate tax rate has already been increased by 1 percentage point since the beginning of the year, to 16% and 6% respectively.

As well as these changes, the latest decision of the Seimas foresees the allocation of the additional revenue to the National Defence Fund.

Alongside, tax breaks have been approved – the period during which the profits of newly established small enterprises are zero-rated is extended from 1 to 2 years.

The requirement to determine the status of small enterprises based on the number of employees is also changed; the size of enterprises will no longer be linked to the number of 10 employees, and the only criterion for small enterprises will be a taxable income not exceeding €300,000 per year.

Liberal Simonas Kairys criticised the change as "ideological politics of the Seimas" and said that the business community had been deceived in the debate on the tax.

It is estimated that a higher corporate tax could generate €47.3 million in revenue next year, and €134.5 million in 2027.