There is no law prohibiting salaried employees from earning income outside their employer.
However, some companies prohibit part-time work in their employment regulations.
Therefore, when people working for such companies file their income tax returns, they should select “□ Pay personally (ordinary collection)” in the section asking how resident tax on income other than salary should be collected.
By doing so, the municipality will not report resident tax information to the employer. The payment notice will arrive at home, so the company will not learn about the side income.
(From Business-Know-How Sharing Site Umi — Recover Your Refund)
Some websites really are irresponsible. Do not be deceived.
There is no absolutely certain way to keep a company from discovering a side job.
The statement above is completely false.
Then again, quite a few tax accountants misunderstand this too, so perhaps the mistake is understandable.
The actual correct answer can be found, for example, in Mr. Ono’s answer on go-sodan.com.
Quoted below:
If the municipality’s resident-tax notice lists only salary income from the company, the company will not learn about the part-time job. However, if it lists side-business income, the company can discover the part-time job by checking the notice.
The format differs by municipality, so whether it is discovered depends on the municipality where you live.
(Source: go-sodan.com Q8367)
Internet information is a mixed bag, and much of it is unreliable. Finding a reputable source is important.
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