On 22 January 2004 the Parliament adopted Law No IX-1969 on Associations. The goal of this law is to join two separate legal forms of legal entities - public organisations and associations - and to regulate their activities in one law as a single legal form of a legal entity, subject to the provisions of the Civil Code. The law regulates the incorporation, management and activities of an association as a separate legal entity, as well as the peculiarities of its closing (reorganisation and liąuidation) and restructuring.

      The law defines the concept of an association revealing its main purpose - to coordinate the activities of the members of an association, to represent and protect the interests of the members of an association or to meet other public interests. An association is a public legal entity and its activities mušt be public, therefore the law establishes that each person is entitled to have access to the report on activities of the association. The law also defines that the objectives of the association should be related to satisfaction of public interests. An association may have and acąuire only those civil rights and obligations which do not contradict the objectives of its activities set out in governmental acts and internal regulations of a company. The rights and obligations which may be held or acąuired by an association mušt be defined in the founding documents of a particular association and ensue from the objectives of activities. An underlying change established in the law is that the former prohibition for associations to engage in commercial activities has been cancelled. It is provided that an association will be entitled to engage in economic-commercial activities not prohibited by laws provided that such activities do not contravene its articles of association and goals of its activities and is necessary for attainment of such goals.

      The law regulates the management of an association. An association mušt have the general meeting of shareholders and the possibility mušt be provided, taking account of the peculiarities of associations as legal entities (the number of their participants), to have another body combining fully or partially the powers of the members of the general meeting of shareholders. The law also defines the ąuorum for adoption of resolutions at the general meeting of shareholders, leaving the possibility however to make those reąuirements stricter in the articles of association. The law sets out that an association mušt have the managing body (one-person or/and collegiate) as well as other bodies formed in the association. The structure of the bodies of an association, their competence and the procedure for their meeting and decision-making are established in the articles of association. In view of the

      peculiarities of an association as a public legal entity, it is stipulated that the members of the association's collegiate bodies which are not managing bodies will receive no remuneration. Furthermore, given the specifics of an association as a public legal entity, Article 16 of the law sets out specific limitations imposed on the activities of an association.

      The finai provisions of the law specify that the articles of association of associations and public organisations incorporated before this law comes into force will be valid to the extent they do not contravene the Civil Code and other laws. It is also established that the associations and public organisations registered prior to enforcement of this law are deemed legal entities which in their legal form are associations without separate re-registration. Sub-units of public organisations which are established as legal entities prior to enforcement of this law, after enforcement of this law will be deemed legal entities which are associations in their legal form without separate re-registration. The articles of association of these associations will be valid to the extent they do not contravene the Civil Code and other laws. While under this law the number of association members may not be less than three, the associations registered before enforcement of this law will have to eliminate this non-compliance with the law within 6 months or, in contrary case, this non-compliance would constitute the ground for liąuidation of an association.

      On 27 January 2004 the Parliament adopted Law No.IX-1977 Amending the Law on Public Institutions. This law serves as a new wording of the Law on Public Institutions.

      On 22 December 2003 the Parliament adopted Law No.IX-1939 on European Economic Interest Groups.

      On 15 January 2004 the Securities Commission by its Resolution No.3 approved the Rules for Reąuirements in Respect of Capital Adeąuacy in Management Companies.

      On 13 January 2004 the Chief Labour Inspector by Order No.1-12 approved the Procedure for Appointing Expertise While Examining Accidents at Work and Occupational Diseases.

      On 12 February 2004 the Government by its Resolution No.166 approved the Form of the Minutes of the Labour Dispute Commission's Meeting.

      On 13 January 2004 the Head of the Military Service Administration Authority by its Order No.V-8 approved the Provisional Rules for Registry of Persons Bound to Military Service in Municipal Institutions, Enterprises, Establishments and Organisations. These rules govern the obligation of enterprises, establishments and organisations to perform the registration of employees that are bound to military service.

      On 15 January 2004 the Parliament adopted Law No IX-1960 on Amending and Appending the Law on Value Added Tax. This law is aimed at approximating the regulation of VAT in Lithuania with the EU legislation. While transporting freely circulating goods between the EU Member States, they are not subject to import-export procedures. Therefore, upon Lithuania's accession to EU the procedure for taxation of goods exported from or imported to EU will change. Inside the EU, the goods supply transactions when goods are transported from one Member State to another are taxed as a certain special category "supply of goods inside the EU" and "procurement of goods inside the EU", and not as import or export. This law contains the provisions necessary for implementation of the procedure for taxation of domestic transactions, as well as provides for the obligations of persons related to such transactions.

      Some VAT exemptions will be cancelled as of 1 May 2004 and a standard 18 percent VAT rate will be introduced. Based on the provisions of the law, a preferential 5 percent VAT rate will be applied to medicines, fresh and frozen meat as well as fresh fish, and in some other cases stipulated in the law. The current preferential 9 percent VAT rate for heating and zero VAT rate for medicines will be valid until 1 May 2004. In order to provide more favourable conditions for the activities of agricultural companies, a preferential 5 percent VAT rate is established in respect of the services of such companies rendered to their own members. A 5 percent rate has been also left to the goods and services which are subject to such rate at present, i.e. to books, newspapers, magazines. A 9 percent VAT rate will be remain applicable to the construction, renovation and heat insulation of sočiai housing.

      The law also regulates the procedure for taxation of distant trade applied in all EU Member States. It establishes the limit of LTL 125,000 per year; a foreign taxable person, having exceeded this limit, will have to register itself as a VAT payer in Lithuania if such foreign taxable person sells goods from another EU Member State to Lithuanian residents or legal entities that are not VAT payers. The persons which are not engaged in economic activities (e.g. budget institutions, public institutions) will also have to register themselves as VAT payers and pay for the goods acąuired in another statė if the value of such purchases exceeds LTL 35,000 per year. This obligation is imposed seeking to ensure that the said institutions do not confine themselves to procurement of the goods only from the Member State with the lowest VAT rate.

      On 29 January 2004 the Parliament adopted Law No IX-1987 on Amending the Law on Excise Duties. This law is a new wording of the Law on Excise Duties. The new wording of the law is aimed at approximating finally the exdse levying system with the EU legislation.

      The law in the new wording contains several substantial novelties. The concepts of a registered tradesman and a non-registered tradesman have been introduced. Registered tradesmen will be entitled, by applying the regime of temporary deferral of payment of excise duties, to obtain for business purposes excise levied goods from any other EU Member State; however registered tradesmen will have no right to manufacture, process, mix or keep excise levied goods or export them applying the regime of temporary deferral of payment of exdse duties. Registered tradesmen will be registered by the tax administrator. Non-registered tradesmen will also be entitled for business purposes to obtain from any other Member State excise levied goods, which are subject to the regime of temporary deferral of payment of exdse duties; such tradesmen however, as compared to registered tradesmen, will be subject to additional reąuirements in terms of ensuring the payment of excise duties, i.e. before procuring excise levied goods from any other EU Member State such persons will have to provide a prior security for the payment of excise duties on the excise levied goods to be received.

      In the law predominates the principle of taxation of excise levied goods when excise duties mušt be imposed on goods in the statė in which they are actually consumed. When transporting excise levied goods to another Member State, such goods will be transported with the deferred payment of excise duties. In cases when to another Member State are transported the excise goods for which excise duties have already been paid in Lithuania, for the purposes of avoiding double taxation in several Member States it is established that upon receipt of acknowledgment of payment of excise duties for such goods (or of the acknowledgment that the payment for such goods is secured) in the Member State of destination, such excise duties paid in Lithuania will be refunded. Furthermore, the registered and non-registered tradesmen of Lithuania as well as warehouses of exdse levied goods will be entitled to obtain goods from other Member States with the deferred payment of exdse duties. Excise duties for the obtained goods will have to be paid in Lithuania in the procedure prescribed in this law.

      This law also imposes exdse duties on electric energy and coal, coke and lignite. However, the enforcement date of taxation of these goods is postponed respectively until the year 2010 for electric energy and until the year 2007 for coal, coke and lignite.