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INCOME TAX - Coggle Diagram

- - - - Paragraph Three: Payments remitted or credited by people living in the Colon Free Zone to people abroad will not be deductible either, as royalties.
        
        Paragraph Four: Costs and expenses must be attributed, as appropriate, as proven to the satisfaction of the General Directorate of Revenue, to taxed income, exempt income or foreign source income.
  - - - Such deductions may not reduce the taxpayer's net taxable income by more than fifty percent (50%) in the year in which the respective share is deducted.
  - - - Paragraph 3 (Transitory). Taxpayers who, in their income tax return for fiscal year 1989, had absorbed, charged to their gross income for that year, one hundred percent (100%) of the losses suffered by the acts referred to in paragraph 1 will not be able to deduct any sum in this concept in any subsequent fiscal year.
        
        Paragraph 4 (Transitory). The tax loss arising from the acts contracted in paragraph 1 may be deducted in five (5) equal items during the next five (5) years. The portion of the quota part not deducted in one year may not be deducted in subsequent years, nor will it cause any refund from the State.
        
        Paragraph 5 (Transitory). Any amount that the taxpayer receives in the future as compensation that covers, in whole or in part, the damages caused by the events referred to in paragraph 1, must be deducted from the net loss originally declared and the taxpayer must Present corrective income statements to make the corresponding adjustments.
        
        Paragraph 6 (Transitory). The term of five (5) years provided in paragraph 4 will run from the 1991 fiscal period. The right to deduct loss is non-transferable, even in the case of consolidations or mergers.
  - - - Paragraph.- For the purposes of this article, the companies mentioned in article 417 of the Judicial Code are excluded, in which case the partners will pay the tax on said participation fees in accordance with the rate established in article 700.
      - Article 707. The taxes in charge of a person already caused at the time of his death will be covered by his heirs as a debt of the succession. Taxes incurred after death will continue to be paid by the estate until the property award is made.
- - - - Article 714. The taxpayer who avails himself of the provisions of the previous article is obliged to declare the income he has obtained during the period of twelve (12) months that corresponds to the year of his accounting operations, at the latest within three (3) months following the expiration of said period.
        
        Article 715. The income statement for each taxable year must form an independent whole from the statements for the other years, both in relation to gross income, and in relation to expenses or deductible expenditures, except the provisions of article 698 of this Code.
        
        Article 716. The income statement must be accompanied by the taxpayer's profit and loss statement and the annexes required for the correct determination of income in the forms prepared by the General Directorate of Income that will be delivered to the taxpayer at no cost at the request of the same.
        
        Article 717. Any natural or legal person who, due to the termination of their business, is no longer subject to the Income Tax related to it, must submit, within thirty (30) days following said termination, the sworn statement and balance final, and must pay once, the corresponding tax until the time of business termination.
        
        Article 718. The General Directorate of Revenue, in view of the taxpayer's declarations and reports, will settle the taxable Income Tax that he has declared and will make the collections thereof within the corresponding periods, except for the adjustment referred to in the Article 710, to be done by the taxpayer.
        
        Article 719. After the tax is settled, the officials in charge of its application will carefully examine the taxpayer's declarations and reports.
        
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- - - - Article 730. Except as provided in Article 710, taxpayers who declare the income they have obtained during one (1) year whose initial date differs from January 1, must pay the amount of the tax in full or in three (3) equal items, in which case payment must be made no later than the following dates: the first item, six (6) months after the expiration of the year in which they obtain the rent; and the second and third items, respectively, nine (9) and twelve (12) months after said expiration.
        
        If the payment of the tax is not verified within the terms referred to in the previous paragraph, the surcharges indicated in article 727 of this Code will be applied.
        
        Article 731. The Income Tax withholding payment system is established in the cases stipulated in articles 732, 733 and 734 and in all those cases established by the Executive Branch through the Ministry of Finance and Treasury [this sentence was declared unconstitutional by ruling of 1/3/1995].
        
        Article 732. The Comptroller General of the Republic, the autonomous entities of the State and the municipalities will deduct and withhold monthly, or when they are paid, from the salaries, allowances, pensions, bonuses, fees and other remuneration for personal or professional services that accrue the public employees, of the autonomous or municipal institutions, the sums that they owe to the National Treasury in respect of the Income Tax, and they will issue to said employees the receipts that correspond to the deductions that are made.
        
        Article 733. With the exception of dividends or profit sharing fees derived from the activities contemplated in Paragraph 2 of Article 694, in literal b) of Article 702, in literals e), f), l), m) i) of article 708 and article 699-A of this Code, legal entities will retain ten percent (10%) of the sums that they distribute to their shareholders or partners as dividends or participation fees.
        
        Article 733-A. Retained earnings in one fiscal period may be capitalized in any subsequent fiscal period. This capitalization will not be subject to the payment of Dividend Tax. The taxpayer who capitalizes his profits will lose the tax credit arising from the Complementary Tax paid on the profits thus capitalized.
        
        Within the period of five (5) years following the capitalization of profits, the legal entities that carry out said capitalization may not acquire their own shares, or grant loans to their shareholders or partners.
        
        Article 734. Administrators, managers, owners or representatives of companies or commercial, industrial, agricultural, mining companies or establishments or of any other analogous or similar activities, and people who exercise liberal or professional professions or trades on their own account or independently, will deduct and they will withhold monthly from the employees and commission agents referred to in article 704, the value of the tax that they must pay by reason of the wages, salary, remuneration or commissions that they accrue.
        
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- - - - For the purposes of this article, they are considered medical expenses.
        to. The premiums corresponding to hospitalization and medical insurance policies that cover the expenses mentioned in literal b) of this numeral.
        b. The sums paid by the taxpayer for hospitalization, diagnosis, cure, prevention, relief or treatment of illnesses, provided that such sums are not covered by insurance policies.