Sworn Statement Of Capital Gains In Panama

Law No. 5 of January 25, 2006 modifying Article 5 of Law 108 of 1974 which grants incentives for exports and indicates other provisions", sets forth, in its Article 2, that it modified Article 701 of the Fiscal Code, to wit:

"Article 701. With the purpose of calculating the Income Tax for the cases mentioned below, the following rules must be followed:

1. In the case of earnings resulting from the disposal of immovable property, the taxable income will be the difference between the real sale value and the sum of the asset’s basic cost, the amount of the improvements made and the expenses necessary to carry out the transaction.
2. If the sale of immovable assets fall within the taxpayer’s regular dispatch of business, the payable tax will be calculated based on the rates established in Articles 699 or 700 of the Fiscal Code.