- Funding Programme
- Year
- 2021
Continued support on tax control of high-net-worth individuals
The Lithuanian tax administration, State Tax Inspectorate (STI), needed continued specialised external technical support to help them follow-up and capitalise on the outputs produced in a previous project targeting the high-net-worth individuals (HNWI), i.e. persons with (very) high income and/or assets. After 16 and a half months of implementation, STI was ready to allocate dedicated staff to continue dedicated control activities for HNWI, with a view to improve compliance of this taxpayers’ segment.
Context
According to 2016 data, about 5.1% of GDP of the wealth of Lithuanian residents was situated offshore (in tax heavens). One percent of Lithuania’s population belong to HNWI segment. They generally managed to avoid paying taxes on most of their income through aggressive tax planning (ATP). In this context, relevant STI knowledge of the potential use of ATP schemes by HNWI was essential for efficient prevention and control activities. The project helped Lithuania address the 2019 Country Specific Recommendation (CSR): “Improve tax compliance and broaden the tax base to sources less detrimental to growth”.
Support delivered
Experts from the International Monetary Fund (IMF) continues to support the STI to use the outputs of a previous project (a new methodology to identify high-net-worth individuals (HNWI), a dedicated strategy and implementation plan, including through dedicated training sessions. Also, better use of tax data received through exchange of information, for auditing activities, and tailored communication activities addressed to the HNWI segment were conducted with the assistance of IMF experts. A closing event was organised in Vilnius on 14 April 2023 to discuss the project’s work and the planned follow-up actions.
Results achieved
After the end of the project, the STI was able to The State Tax Inspectorate to capitalise on the ongoing reforms (mainly, the implementation of a revised strategy for the HNWIs and the action plan) and apply in practice, during tax audits for a selected number of taxpayers, the new risk-based approach. The following results are envisaged on the short to medium term: improved risk management and compliance for the HNWIs segment, better prepared staff in the STI, additional tax revenues, and lower collection costs.
More about the project
You can read the documents related to the project here: