How to submit Expenses and request Reimbursements in Nepal?

The Inland Revenue Department (Nepal's tax authority) sets specific guidelines to differentiate between non-taxable and taxable expenses. 

Employees must follow a specific process to have their expenses reimbursed:

• VAT Bill Requirement: For every expense, the employee must present a physical VAT bill issued in the name of Cloud Label Pvt. Ltd. The VAT bill must also contain the PAN (610013418) of Cloud Label Pvt. Ltd.
• Reimbursement Details: The original expense amount plus the VAT paid will be reimbursed, ensuring the employee is not out of pocket. The added VAT from this tax invoice will be accounted for.
• Documentation: The original bill in its accounts will be stored and a scanned copy will be shared with the client. The employee will also receive a stamped copy of the bill, which serves as proof of submission and processing.

Expense Management Instructions

To streamline the reimbursement process, employees must adhere to the following guidelines:

• Submission Requirements:

  • Physical VAT Bill: Employees must provide a physical VAT bill for each expense.
  • Timely Submission: The bill must be submitted no more than 2 months after the payment has been made and the bill has been collected by the employee.
  • Condition of the Bill: The bill must be original, readable, and in good condition.

• Allowed Expense Types:

  • Only expenses related to business activities and within a reasonable limit as per the nature of the business and the job description of the employee are allowed. For example, business travel expenses for a Business Development Manager would be eligible.

• Disallowed Expense Types:

  • Personal Expenses: Any expenses that are personal in nature and not related to business activities are not eligible for reimbursement.
  • Alcohol and Tobacco: Expenses for alcoholic beverages and tobacco products are disregarded by the Tax Authorities of Nepal. This includes bills that list these items alongside other eligible expenses. For example, a bill that includes both food items and an alcoholic beverage will not be accepted.
  • Incorrect Billing: Expenses not invoiced to Cloud Label Pvt. Ltd. are ineligible for reimbursement.
  • Lack of Proper Documentation: Bills without a physical or original copy of the VAT bill will not be reimbursed.

Taxable Expenses (Regardless of Presenting VAT Bills)

Certain expenses are always considered taxable, even if a VAT bill is presented:

• Personal Commuting Allowances: Allowances for commuting between home and the office are treated as personal benefits and are taxable.
• Tuition Reimbursements: Payments for educational purposes, even if job-related, are considered additional benefits and are taxable.
• Phone Expenses Not Incurred for Work: Reimbursements for phone bills that are not strictly work-related are taxable.
• Additional Benefits: Any benefits provided by the employer to the employee apart from the basic salary, such as personal allowances, are taxable.
• Loans or Advances: Any loans or advances provided to the employee by the employer are considered taxable income.

Special Note: Use of Airwallex Wallet

For expenses made through the Airwallex Wallet, which uses the assigned debit/credit card of the employer, the expenses can be directly paid by Cloud Label Pvt. Ltd. or Niural. This process eliminates any need for Cloud Label Pvt. Ltd./Niural to record such transactions for tax or bookkeeping purposes. Additionally, these amounts will be excluded from salary calculations.