Lithuania’s sole bank owned by local capital, Siauliu Bankas, said on August 30 it will pay €2.2 million in the so-called temporary solidarity contribution for the first half of this year, recalculating the amount of its tax obligation to bring it into line with the latest methodological changes by the State Tax Inspectorate (STI), BNS, a Lithuanian newswire, reported on August 30.

Siauliu Bankas had said earlier that it would not have to pay the windfall tax for the year 2023.

"Upon receiving new methodological instructions for calculating the windfall profits tax from STI on August 24, 2023, which eliminate and substantially change the previous interpretations of the application of the law provided by this institution, the bank re-evaluated the amount of the tax obligation for the first half of 2023, which amounted to €2.2 million," the bank said in a statement to the Nasdaq Vilnius Stock Exchange.

The tax authority last week changed the tax calculation methodology to exclude leasing, factoring and bonds from the definition of new lending.

The Lithuanian Banking Association has said recently that this will likely increase the amount of tax payable by banks.

Siauliu Bankas said that "considering the calculated corporate income tax, the overall negative impact on the bank and group's operating results amounted to €1.8 million".  

Lithuania introduced the windfall tax on banks' net interest income for 2023 and 2024 in May following the European Central Bank's sharp interest rate hikes.

The tax is charged on the part of net interest income that exceeds the average of the previous four years by more than 50%.

Banks have until August 31 to make the first payment, with the full tax for the year 2023 to be paid by June 15, 2024.

The government plans to use the proceeds for defence needs and for military and civil transport infrastructure projects, BNS said.