Uganda: Taxing Moonlighters And Freelancers

Last Updated: 3 October 2019
Article by Steven K. Mugisha

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]


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 advisers to handle their tax matters if the A-Option is to be adopted.


If we consider monthly gross employment earnings for a resident, the first UGX 235,000 is exempt from tax but anything above is taxed at different rates in the 10% - 40% range

For example a person with gross monthly salary of UGX 230,000, the PAYE submitted to the URA by the employer in relation to this employee would be ZERO; and if the same person is concurrently in other employment earning the same (UGX 230,000), the other employer will also compute PAYE as ZERO. Notice that this allows the individual to in error enjoy double relief

The right amount of PAYE tax should have been UGX 40,000 thus the same like the one computed if the entire UGX 460,000 were earned from a single employer

In the absence of a unique identifier for employees, NOT the right amount of PAYE tax was being collected from Moonlighters; but now with clearer visibility of all employment income, I am sure that the URA will be keen to collecting all that is due to "Ceasar"

Employers therefore should proactively inquire from the employees whether they have other employment, if so then the multiple employers need to agree on who should be in the primary employer's seat for relief to be given only in one payroll unless it is not extinguished

Let us also recall that employers have a duty to withhold PAYE tax on employment income and if not retained in the right quantum, they (employers) are liable

Because of the sterner compliance requirements that the A-Option brings, I would not favour it if I were in the Moonlighters' Club; however Moonlighters have a duty to declare all other employment to employers if the B-Option is to be embraced. This will enable the right amount of PAYE tax to be withheld by the Moonlighters' various employers

Freelancers and consultants in individual capacity have previously gotten away with only paying 6% WHT as retained by their clients on payments. This is no longer possible with TIN declaration in the WHT return. Just like Moonlighters, the Freelancers' incomes are all visible and traceable to themselves and therefore will have no choice but to file income tax returns and where applicable VAT returns

Now that we know the implications of the URA requirements regarding the TINs of Moonlighters and Freelancers, we shall therefore live happily ever after

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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