In this hectic and material world, the goods that are marketed fall into two broad categories: tangible and intangible, which in turn have subcategories.
The first are hard assets that can be perceived with the senses, appreciated, felt and touched, such as furniture and real estate.
In contrast, intangible property consists of mere rights, has no physical body, cannot be seen or touched and can only be perceived when there is recognition of certain rights and obligations. Intangible goods commonly arise from knowledge, know-how, operating processes, technology, research, invention or creation. These include, but are not limited to, franchising, public service concessions, copyright, software, industrial secrets, trademarks, intellectual property rights and the like. One thing that distinguishes intangibles is that the person who owns the right and the right by itself must be recognized by a legal entity.
Executive Decree 170 of 1993, at that time the income tax regulation (ISR), in describing the gross income in its article 2 includes income from "the temporary or definitive transfer of key rights, trademarks, patents of invention, royalties and other similar rights. " Article 9 of the same decree also mentions "the income produced by things or rights used economically within Panama", under the well-known territorial tax concept in force in Panama which rules that foreign sourced income is not taxable in Panama.
As for the tax on the transfer of movable tangible property and services (VAT), intangible assets are beyond the scope of local VAT, as indicated in article 2 of Executive Decree 84 of 2005, when, in explaining the taxed facts, it exempts from such tax "The use of intangible or incorporated property, as well as any other property of registered or reserved right, framed within copyright and related rights or industrial property such as patents, service or product marks, inventions, formulas, processes, ... "
The Code of Commerce, in addition to the Tax Code, does its part when it says in its article 2 that the purchase and sale of incorporeal things, such as copyright, trademarks, industrial privileges, name, signature or commercial reason , Among others, in order to profit from its resale or by any other commercial means, will be considered acts of commerce.
Thus, intangible assets are subject to the general tax rules and provisions of the Fiscal Code, and to those that concern the Commercial Code.
The rules that regulate remittances are also applied when the beneficiary is domiciled abroad.
In addition, the rights deriving from a contract of irrevocable promise of immovable property or securities issued by a legal person, by means of which the promising buyer and the promising seller have mutual rights and obligations, are recognized as intangible. From this contract of future transfer of a property built or to be built or to transfer the shares of a company that owns a real property, the rights of each party are born to receive the agreed compensation. These rights are intangible goods as long as the contract is not concluded.
The sale or onerous assignment of the rights of the contract of promise for the sale of real estate, since it is not a sale of a properly constituted property, the profit generated in the transfer of such rights is classified as taxable income and its Tax shall be calculated on the basis of the rates of articles 699 or 700, plus the consequences of article 733 in case the seller is a legal person of the Tax Code.
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