Taxing Moonlighters And Freelancers

About the end of last year (2017), I happened to be having lunch at the staff canteena of a pan-african TV powerhouse. At the head of the table sat a Prince (at least according to himself) and somewhere mid-table sat other, one of them claimed to be the "real Prince" and that the other was the "other Prince".

The "other Prince" retaliated by saying that if all of us died at one go (God forbid); the news headlines would read "Prince Dies With 5 Others".

I had been passively listening but from then on, I became present at that lunch table and noticed that the two had quite a number of similarities; both loud, both full of self but full of life, both "princes" and whereas the "other Prince" (who is by the way the boss of the "real Prince") had just come in from another job, the "real Prince" was hurrying out to his 3 hour show at a radio station; these "Princes" were both Moonlighters.

The moonlighting I am talking about has nothing to do with the 1985 series starring Bruce Willis. Moonlighting in some jurisdictions relates to persons registered as unemployed but nonetheless take on paid work. Others use the term to mean having another job and typically concealing it from the regular known employer. Only for this article "Moonlighters" shall refer to employees with multiple employers" whether there is concealment or not.

Until recently there was no strict requirement for every employee to have a Tax Identification Number (TIN), so it was possible for the Moonlighters to have some of their income not properly taxed or not taxed at all. These requirements by the URA suggest that these EITHER be in employment at one and consultant at other organisations [A-Option] OR be actual employees to multiple employers [B-Option]

A-Option

Under this option one could have Employment Income on which Pay As You Earn (PAYE) tax is withheld; and then consultancy fees classified as Business Income on which 6% With-Holding Tax (WHT) is retained unless the Moonlighter is withholding tax exempt.

This option is tempting for it leaves Moonlighters with more disposable cash than the B-Option but it comes with the responsibility to file income tax returns including provisional returns; the 6% WHT is also not a final tax therefore requiring payment of the remaining bit of income tax and lastly there could be need to register for VAT once the Moonlighter hits the registration threshold in regards to consultancy income. Moonlighters may also need to hire registered tax...