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Lithuania Listed 20th out of 189 Economies in the World Bank Doing Business 2016 Ranking

Date

2015 10 28

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According to the World Bank report Doing Business 2016, Lithuania has risen four positions in the past year and is now ranked 20th out of 189 countries, and it is 8th among European Union countries.

Furthermore, Lithuania remains one of the most favourably assessed countries in terms of property registration and execution of contracts. In its report Doing Business 2016 the World Bank states that Lithuania is considered to be one of the most advanced countries in terms of having a very high quality land administration system. Property registration and transfer from one company to another is comparatively simple, fast and cheap in Lithuania. Having improved the procedure of property registration and simplified the procedure of contract execution, Lithuania managed to climb to second position in terms of property registration and to third place in terms of the contract execution indicators.

As Minister for Economy Evaldas Gustas put it, one of the priorities of this government is to improve the business environment. Doing Business–annual research carried out in accordance with a predefined methodology by the World Bank–focuses on the business environment. This indicator is important for Lithuania as it records improvements in the business environment.

‘In order to have an even better showing in the Doing Business ratings, there are plans this year to amend the corresponding legislation under the Ministries of Environment, Energy, Economy, Transport and Communication, Agriculture, Justice, Finance and Social Security and Labour, as well as to initiate new reforms to improve the business environment and positively affect Lithuania’s position,’ the Minister for Economy said.

The most dramatic jumps in the ranking during the reference period (from 1 June 2014 to 1 June 2015) were in the field of property registration–from 9th to 2nd position, in the field of contract execution–from 14th to 3rd position, in the field of starting a business–from 11th to 8th position, in the field of connecting to power networks–from 105th to 54th position, and in the field of small business investment protection–from 78th to 47th. Lithuania is also high on the list according to ease of obtaining construction permits (18th), foreign trade (19th) and credit conditions (28th).

When evaluating the advancement countries have made with regard to the ten indicators, the World Bank noted that Lithuania has implemented five positive reforms in three areas during the reference period: starting a business, connecting to power networks (2 reforms) and small investors’ protection (2 reforms). There have been no negative reforms to prevent starting a business in Lithuania.

The key reform in starting a business recognised by the World Bank means that when registering a new company in the Register of Legal Entities, the company can also be registered as a VAT payer. Information on the registration of a new business and the application to become a VAT payer will automatically be sent to the State Tax Inspectorate (STI), and the administrator’s decision will be provided electronically in the My STI system within three business days.

In the field of connecting to power networks two main reforms were assessed. Specifically, a shorter period (up to 50 calendar days) was established for connecting the power equipment of a non-domestic consumer to power networks and the number of procedures for connecting to power networks was reduced to four. This led to the biggest rise for Lithuania in this indicator from 105th to 54th position.

With regard to the protection of small investors, the World Bank recognised two essential reforms in Lithuania–that should there be a conflict of interest where personal interests of a board member contradict or might contradict the company’s interests, the board has to make a decision regarding the removal of the board member from voting on a particular issue. Another reform is that once the amendments of the Law on Enterprises come into force, subsidiaries will no longer be able to subscribe for the shares of the parent company, and in cases where a subsidiary acquires the shares of the main company, it will be considered that the shares have been acquired by the company (whose shares have been bought) itself.

Lithuania has also adopted some other important reforms and improvements of a legal nature. For instance, electronic services for submitting customs declarations electronically in a single procedure (the ‘one stop shop’ principle) were introduced, and the functions of the website www.planuojustatyti.lt (transl. planning to build) were expanded so that builders can submit applications electronically concerning special requirements stipulated in the legislation and online accessibility to communication and supply systems to municipal offices or other institutions within the framework of their respective competences and then receive all the required stuff electronically. In addition, draft laws have been prepared to provide tax payers with the opportunity to pay several taxes by one payment order; draft laws setting clear rules for building power networks on private land plots by establishing servitude as well as repayment rules have also been prepared.

Lithuania has introduced further reforms and improved the indicators for connecting to power systems, insolvency, contract execution, etc., and these changes should be reflected in the 2016 report by the World Bank.

According to the Doing Business 2016 report, Lithuania overtakes EU countries such as Austria (21st), France (27th), Holland (28th) and Belgium (43rd). Like the previous year, the most business-friendly country in the list of Doing Business 2016 ratings is Singapore. New Zealand is second and Denmark is third.

This year, like last year, the World Bank introduced some changes to indicators on the basis of which Lithuania’s position was recalculated in terms of the report announced last year. Based on the updated indicators, Lithuania’s position in the 2014 report would have been 21st.