Lithuania's government wants to extend the current excess profits tax imposed on banks for another year.
The Cabinet in Vilnius decided on Wednesday to keep the regulation introduced last year in force until 2025.
Lithuanian media reports suggest the additional revenue for the Treasury will be used to finance rising defence spending, which is to be increased to 3% of gross domestic product (GDP) in the coming years.
The parliament of the Baltic EU and NATO country still has to approve the plan.
Under the current regulations, banks must pay an additional statutory levy of 60% in 2023 and 2024 on net interest income that is more than 50% higher than the average of the previous four years. This assessment basis is also to be applied for 2025.
It is hoped the renewed tax will raise €60 million in additional funding for defence purposes.
The Lithuanian Banking Association criticized the planned extension of the tax, accusing the government of breaking its promise that the tax would only be a temporary solidarity contribution.
Lithuania borders the Russian Baltic Sea exclave of Kaliningrad and Russia's ally Belarus. The war in Ukraine is seen as a direct threat to its national security, leading to the increase in its military spending.