Lithuania may introduce windfall tax on bank

The central bank governor and finance minister of Lithuania announced on Monday that the country may implement a windfall tax on banks if their profits persistently increase this year, driven by the rise in interest rates. The governor, Gediminas Simkus, stated that if the profits persist in 2023, it would be appropriate to redistribute them through fiscal decisions.

Finance Minister Gintare Skaiste estimated that Lithuanian banks could earn profits of 1 billion euros in 2023, more than three times the level of recent years. She emphasized that the extra funds generated by the government should go towards defense spending.

The two Swedish-owned banks, Swedbank and SEB, hold over 50% of Lithuania’s banking assets and reported a 64% and 49% increase in profits, respectively, in 2022. The third-largest bank in the country is owned by British fintech firm, Revolut, and serves the European Union and European Economic Area, with less than 2% of its customers being Lithuanian residents. The decision on whether to tax the banks will be made in the next few months.