Lithuania finance minister eyes leading 'technovation' role

Q: Where would you like to see more foreign investment in Lithuania?

A: Our strategy is to focus on areas where you can combine speed and security. The best few letters to describe this are STIG: start, technovate, invest and grow. In Lithuania we have a few very vibrant ecosystems in the hi-tech industries – fintech, lasers, biotech, life sciences and green tech in general.

There are a lot of good incentives for choosing Lithuania for the establishment of new companies and growing them quickly. We have introduced tax breaks for start-ups. In the area of fintech, for example, we have introduced a regulatory sandbox, a very fast and effective licensing process and a newcomers programme to ensure compliance issues are tackled in the most efficient way.

In terms of how we ‘technovate’, we have shaped the best package in the whole of the EU for R&D. For example, R&D expenses can be deductible three times.

Lithuania is number one in central and eastern Europe for university and business co-operation in R&D. We have a world-class ICT and cybersecurity infrastructure, and a very small profit tax. For SMEs it is just 5%, and for other firms it is 15%, but if you invest into new technologies and machinery you can deduct from taxable profit. This means you can reduce your tax bill to zero.

Q: What else makes Lithuania attractive for investment?

A: Lithuania has proved how quick an economy can grow. The country will [probably] be number one in the OECD in terms of growth rates of GDP per capita for the next 10 years. Our growth rate was about 4% in 2018, and will probably be about 3.5% in 2019.

In terms of ease of doing business, Lithuania is ranked 14th in the world, and is number one in central and eastern Europe, according to the World Bank. Steps that we have already planned show how we’re going to be among the world’s top 10. When we talk about fintech, we have a [future-proof] regulatory framework. We are [also focused upon] new phenomena such as crypto-assets. Lithuania was also the first country in the world to issue comprehensive guidelines on initial coin offerings and the area of taxation, accountants, money laundering and regulatory frameworks.

We see Lithuania as a gateway to the whole of the EU, which reaches 500 million consumers. There’s a huge pool of talent for fintech in the country and this is growing. Lithuania is probably the best country to get a Masters degree in fintech, and we’re the most educated society in Europe when it comes to the proportion of the population with a higher education. The future of Lithuania is ‘Litechnia’.

Q: What are you doing to make Lithuania more attractive to foreign investment?

A: I have an electricity analogy about FDI. Electricity chooses the path with no barriers. If you remove unnecessary barriers to trade and investments in the areas of authorisation or licensing processes, then you become far more business friendly.

In Lithuania we have a few hi-tech ecosystems that are already in place and our approach is to remove any kind of unnecessary barriers.