In every business line, there are times when employees have to use their personal funds for meetings, conferences, business trips, or unplanned healthcare emergencies. Having a reimbursement form template can help ensure that your company complies with its corporate responsibility.
Employee reimbursement is a process of reimbursing funds submitted by employees to the company for expenses related to the company’s activities. According to the Law of the Republic of Indonesia Number 42 2009, reimbursement is:
"value in the form of money, including all costs requested or should be requested by a business owner for Taxable Services, export of Taxable Services, or export of Taxable Intangible Goods, but excluding Value Added Tax which is collected according to this Law and price discounts included in the Tax Invoice or the value in the form of money that is paid or should be paid by the Service Recipient for the use of the Taxable Services and/or by the beneficiary of Intangible Taxable Goods for the use of Intangible Taxable Goods from outside the Customs Area within the Customs Area”.
In practice, there are three types of parties involved in the employee reimbursement process, including:
1. Producers of goods or services that sell the products, which can be suppliers, vendors, etc;
2. Intermediaries who pay for the product in advance, such as employees; and
3. Consumers or product recipients, in this case are companies that need these goods and services.
As mentioned before, employee reimbursement will be subject to VAT, where the reimbursement is included in the DPP element or tax base which is subject to a Value Added Tax rate of 10%. The way to calculate it is 10% VAT multiplied by the Basic Tax Imposition which includes the Selling Price, Replacement, Import Value, Export Value, or other values.
In the Tax Invoice, information regarding the handover of Taxable Goods and/or the Taxable Services must also be included, to justify the fund reimbursement.
Reimbursement is also stated in Law No. 36 2008 about Income Tax:
Income is subjected to tax. this includes any additional economic capacity received or obtained by a Taxpayer, both originating from Indonesia and from outside Indonesia, which can be used for consumption or to increase the wealth of the Taxpayer in question, in any name and form, including:
a. reimbursement or compensation for work or services received or obtained, including salaries, wages, benefits, honoraria, commissions, bonuses, gratuities, pensions, or rewards in any forms, unless otherwise stipulated in this Law;
As a form of rewards for their employees who have worked for a long time, some companies provide health benefits as a right for their employees. The scope of the benefits covered and its limit will vary and depend on the policies of each company and the employees’ position.
Health claims can include hospital treatment (inpatient or outpatient), redemption of drugs, claims for eye examinations and getting glasses, claims for dental treatments, claims for childbirth and pregnancy related check ups, claims for medical checkups, up until claims for Covid-19 swab tests.
Generally, transport claims are given to employees who have a higher level of mobilization compared to others. These claims are usually present in activities that are closely related to company interests, such as business travel, meetings outside the office, delivering documents, attending certain events and many more.
Other than gas and parking costs, there are several companies that allow their employees to reimburse claims for vehicle repairs as well as purchasing spare parts at the garage.
There are usually expenses when the employees have meetings with clients or with vendors regarding work issues. They would pay for the consumption during these meetings, and often, the employees will use their personal funds. They can reimburse this expenses under the entertainment claims category.
Gratification claims can be applied to expenses made on behalf of the company intended for clients, vendors and partners. These expenses can be in the form of money, goods, commissions, interest-free loans, travel tickets, lodging facilities, tours, treatment and other facilities, as a form of gratification.
Some Jobs, such as marketing or sales, require more time dealing with clients, vendors and partners and through telecommunications provider services. In return, this will add to their telecommunication bills. The company will provide a communication claim to support this.
The format and template for reimbursement form varies for every company. It can be simple or more detailed, but it definitely needs additional attachments like invoices, receipts or the original bill from the service provider or manufacturer. These are the common components in an employee reimbursement form:
1. Name of applicant or employee;
2. Employee identification number;
3. Department of the employee;
4. Description of the reimbursement to be submitted;
5. Amount billed to the company (or the company's financial department);
6. Signature of the applicant; and
7. Approval from the person in charge.
For healthcare reimbursement, a letter of recommendation from a doctor, a referral letter from the hospital, as well as an attached receipt for the medicine are mandatory as valid proof for the application.
Reimbursement form of a business trip will have different information as requirements. Details will include the date the business trip took place, what categories are requested for reimbursement, invoices, billing receipts and payment proof.
Meanwhile, for reimbursement relating to the purchase of goods and services from vendors related to the company's operational needs, an invoice, letter of passage, or receipt of the goods will be required.
The following is an example of an employee reimbursement form:
Processing claims manually is a time-consuming activity. While the time needed to process claims is insignificant when the team members are still few, it will continue to increase as the number of employees grows. Claims management systems can be applied early to manage finances easier as the company grows. Therefore, start your finance management automation now to simplify the company's financial processes in the future and reduce risks of fraud or manual errors that are prone to occur in manual processes.
Aspire claim management solutions can help fast-growing companies to better manage their employees’ claims and expenses. With Aspire’s claims management feature and expense management, companies can save significant time and work hours. Check how many work hours and costs that you can save by using Aspire all-in-one finance OS here.
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