How to Distinguish Between Taxable and Non-Taxable Allowances in Bhutan

Employee allowances are an important part of payroll in Bhutan. They can include housing support, travel allowances, subsistence payments, bonuses, reimbursements and other employment-related benefits. However, not every allowance is automatically tax-free.

For payroll teams, the key is to determine whether an allowance or benefit must be included in the employee's taxable employment income under the applicable income-tax rules.