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Income Tax - Coggle Diagram

- - - - Article 697. It is understood by deductible expenses or disbursements, the expenses or disbursements caused in the production of income and in the conservation of its source; consequently, those expenses, costs or losses generated or caused in businesses, industries, professions, activities or investments whose income is from a foreign or exempt source will not be deductible, among others. The Executive Branch, through the Ministry of Finance and Treasury, shall establish the regulations for the application of the principles contained in this article.
        
        Paragraph One: The following expenses or disbursements will also be deductible:
        a. Donations to non-profit educational or charitable institutions in the country, as long as they are institutions previously approved for that purpose by the Ministry of Education, the Ministry of Labor and Social Welfare or the Ministry of Health, depending on the case; and donations earmarked for the Civic Action program of the National Guard.
        When the donation is in kind, the amount of the deduction will be the acquisition cost according to the invoice, if it is a new good, or the book value, that is, the cost less the accumulated depreciation, if it is a used good.
        
        Paragraph Two: The following are not expenses or disbursements incurred in the production of income or in the conservation of its source and, therefore, are not deductible: a. The personal or subsistence expenses of the taxpayer and his family;
        b. Expenses incurred or paid for building or permanent improvements made to increase the value of any real or personal property, it being understood that said buildings or improvements will be subject to depreciation or amortization;
        c. The sums invested in recreational trips, in installments, in popular festivals, in entertainment or entertainment and in donations that are not advertising.
        
        Paragraph Three: Payments remitted or accredited by persons located in the Colon Free Zone to persons abroad, as Royalties, will not be deductible either.
        
        Paragraph Four: The costs and expenses must be attributed, as appropriate, as reliably verified to the satisfaction of the General Directorate of Revenue, to the taxable income, to the exempt income or to the income from a foreign source. When the cost and/or expense are incurred to obtain taxable income and/or exempt income and/or income from a foreign source, they will only be deductible from the taxed income in the proportion that it bears in relation to the total income. (Added by Article 2 of Law 61 of December 26, 2002, which dictates Reorganization and Simplification Measures of the Tax System).
        
        Article 698. When for any reason the taxpayer fails to deduct expenses corresponding to one (1) taxable year, these may not be deducted from the income of any subsequent year. Expenses that by their very nature could not be determined exactly in the year in which they should have been deducted are excepted. In this case, the expense can be deducted only in the year in which the exact amount thereof is determined.
        
        Article 698 A. Notwithstanding the provisions of article 715 of this Code, and without prejudice to other current loss-carrying regimes, the losses suffered by the taxpayer in a fiscal period will be deductible in the following five (5) fiscal periods, at a rate of twenty percent (20%) of the aforementioned loss per year. Such deductions may not reduce the taxpayer's net taxable income by more than fifty percent (50%) in the year in which the respective portion is deducted.
        
        Paragraph 1 (Transitory). Taxpayers who suffered losses due to acts of vandalism that occurred after December 20, 1989 may deduct up to a maximum of fifty percent (50%) of the balance of the loss attributable to such acts of vandalism that has not been deducted in the year. of 1989, in accordance with and subject to the regime contained in these transitory paragraphs. The deductions can only be made in the affidavit of the Income Tax, not in the estimated declaration.
        
        Paragraph 2 (Transient). In order to benefit from the right provided for in the previous paragraph, the taxpayer must certify before the General Directorate of Revenue that he has complied with the provisions of articles 3, 4, 5 and 6 of Cabinet Decree No. 60 of February 23, 1990.
        
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        Article 699. The legal entities will pay for their net taxable income for the fiscal year of 1995 and in the following exercises, the Income Tax in accordance with a rate of thirty percent (30%).
        
        Article 699-A. Subject to the regime provided for in this article, as of the fiscal year of 1991, the legal person considered micro, small and medium-sized companies, will pay the Income Tax in accordance with the rate and the regulations applicable to natural persons on that part of your net taxable income attributable to your annual gross income that does not exceed one hundred thousand balboas (B/.100,000.00); and in accordance with the rate and regulations applicable to legal entities on that part of their net taxable income attributable to their annual gross income that exceeds one hundred thousand balboas (B/.100,000), without exceeding Two Hundred Thousand Balboas (B/ .200,000.00). In addition, said legal entities will be exempt from the payment of the Complementary Tax.
        
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- - - - Interest paid on loans that are destined exclusively for education within the national territory of the taxpayer or of the people he supports or educates, and those caused by loans granted by the Institute for the Training and Use of Human Resources ( IFARHU).
        
        Medical expenses incurred within the national territory by the taxpayer, provided they are duly proven. For the purposes of this article, they are considered medical expenses.
        a. The premiums corresponding to hospitalization and medical care insurance policies that cover the expenses mentioned in literal b) of this numeral.
        b. The amounts paid by the taxpayer for hospitalization, diagnosis, cure, prevention, relief or treatment of illnesses, provided that such amounts are not covered by insurance policies.
        
        Twenty-five percent (25%) of representation expenses and other fixed non-reimbursable allowances that you receive from your employer up to a maximum of Six Thousand Balboas (B/.6,000.00) per year.
- - - - PARAGRAPH 1. The taxpayer is required to file their income statement, except in the following cases:
        
        The worker who earns a single salary;
        
        Natural persons who exercise professions or activities independently, whose net taxable income is one thousand balboas (B/.1,000) or less in the respective fiscal period, as long as their gross income does not amount to more than three thousand balboas (B/.3,000) annually;
        
        Natural persons who are engaged in agricultural activity and have gross annual income of less than one hundred thousand balboas (B/.100,000). For this purpose, it is understood as:
        
        Agricultural activity. The production of food, salt, wood, agricultural raw material, poultry, livestock and forestry, own harvest of basic grains such as rice, corn, sorghum and other agricultural products.
        
        Livestock activity. Livestock, pig farming, poultry farming, beekeeping and commercial farming of other animal species.
        
        Activities related to aquaculture. Those relating to the cultivation, processing and marketing of hydrobiological resources produced under controlled conditions.
        
        Paragraph 2. Taxpayers may request from the General Directorate of Revenue, before the deadline for submitting the annual income tax return, an extension of the deadline for submitting the income tax return, an extension of said term, up to a maximum period of three months, prior payment of the tax that the taxpayer deems due.
        
        Paragraph 3. Legal persons established or to be established in the Colon Free Zone, or in any other free zone that exists or will be created in the future, including the oil-free zones referred to in Cabinet Decree 29 of 1992 , will be obliged to present, separately, their sworn income statements, related to their interests and foreign operations.
        Paragraph 4. As of January 1, 1997, all legal entities established or established in any free zone within the territory of the Republic of Panama, regardless of their operations, must prepare, and maintain in their establishments, annual financial statements in accordance with generally accepted accounting standards and principles. The financial statements must be endorsed by an authorized public accountant, issued within ninety (90) days following the closing date of the fiscal period, and kept at the disposal of the authorities of the General Directorate of Revenue, who may require a copy. original of said states to document the file of the proceedings that they practice.
        
        Article 711. The income statements may be rendered in forms prepared by the General Directorate of Revenue, or through electromagnetic computer systems, at the taxpayer's choice.
        Article 712. The income statements shall be prepared and endorsed by an Authorized Public Accountant in any of the following cases:
        In the case of taxpayers engaged in activities of any kind whose capital is greater than One Hundred Thousand Balboas (B/.100,000.00).
        In the case of taxpayers who have an annual sales volume greater than Fifty Thousand Balboas (B/.50,000.00).
        
        Article 713. The taxpayer who, in accordance with the Commercial Code, is required to keep accounting books, may file his income statement on a date other than the one referred to in article 710 if his accounting period does not correspond to the calendar year. , provided that you obtain prior express authorization from the General Directorate of Revenue.
        Article 714. The taxpayer who avails himself of the provisions of the previous article is obliged to declare the income that 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 tax return for each taxable year must form a whole independent of the returns for the other years, both in relation to gross income and in relation to deductible expenses or disbursements, 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 the income in the forms prepared by the General Directorate of Revenue that will be delivered to the taxpayer at no cost at the request of the taxpayer. same.
        Article 717. Any natural or legal person who, due to the termination of his business, ceases to be subject to the Income Tax related to it, must present, within thirty (30) days following said termination, the affidavit and the balance final, and must pay the corresponding tax at once until the time of cessation of business.
        Article 718. The General Directorate of Revenue, in view of the taxpayer's declarations and reports, will liquidate the taxable Income Tax that he has declared and will collect the same within the corresponding periods, except for the adjustment referred to in Article 710, which will be done by the taxpayer.
        Article 719. After the liquidation of the tax has been made, the officials in charge of its application will thoroughly examine the taxpayer's declarations and reports.
        Article 720. Provided that due to the investigations or proceedings referred to in the previous article, the amount of the tax payable by the taxpayer is greater than that resulting from the liquidation referred to in article 718, and without prejudice to the sanctions that may apply. Instead, a resolution will be issued that will contain the additional liquidation for the part of the tax that has not been liquidated.
        Article 721. The tax contained in the resolution referred to in the previous article may not be collected, nor the receipts corresponding to it be issued, except when it is executed.
        Article 722. The amount or sources of income or profits, nor the losses, expenses or any other information related thereto that appear in the taxpayer's declarations may not be disclosed in any way, nor will these or their copies and the documents that accompanied by it are examined by persons other than the taxpayer or his representative or proxy.
- - - - Article 734. The administrators, managers, owners or representatives of companies or commercial, industrial, agricultural, mining establishments or of any other analogous or similar activities, and the persons 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 salaries, wages, remunerations or commissions that they earn. Similarly, local film distributors will withhold the tax they pay to film production companies.
        Article 735. The natural or legal person who, being obliged to do so, does not withhold the sums corresponding to the Income Tax, in accordance with the provisions that govern the matter, will be jointly and severally liable with the respective taxpayer for the payment of the tax. What is it about.
        Article 736. If sixty (60) days following the expiry of the term for the payment of the tax, it has not been made by the taxpayer, proceedings will be taken against him for the processing of the executive judgment by coercive jurisdiction.
        Article 736-A. Despite what is established in articles 728 and 736 of the Tax Code, provided that the Treasury has well-founded knowledge that the taxpayer is carrying out acts aimed at avoiding the payment of the tax, it may proceed directly to its collection through the coercive jurisdiction trial by putting out of trade the taxpayer's assets in sufficient quantity to collect the amount of the tax.
        Article 737. The Treasury's right to collect the tax referred to in this Title prescribes after seven (7) years, counted from the last day of the year in which the tax should have been paid. The obligation to pay what is withheld according to article 731 prescribes after fifteen (15) years, counted from the date on which the withholding should have been made.
        Article 738. The term of the prescription is interrupted:
        a. By executive order issued against the taxpayer;
        b. By written promise of payment of the taxpayer duly guaranteed; Y,
        c. For any written action of the competent official aimed at collecting the tax.