The Employment Tax Incentive (ETI) in South Africa is a government programme that aims to encourage employers to hire and retain young workers. The incentive is intended to reduce the cost of hiring and retaining young employees by providing a reduction in the amount of Pay[1]As-You-Earn (PAYE) tax that an employer is required to pay. To be eligible for the ETI, the employer needs to be compliant with SARS in terms of no outstanding amounts owing to SARS. This could be in terms of VAT, UIF, SDL, PAYE or any other non- compliance with SARS relating to the employer’s PAYE reference number.
The employee eligibility can be seen below:
■■ An employee must be between the ages of 18 and 29 years old
■■ The employee must also earn R6,500 or less per month in terms of their gross
remuneration figure
■■ The employee should have been employed on or after 1 October 2013
■■ Employers can claim the ETI for a maximum of 24 qualifying months for each qualifying employee If the employer is not subject to wage regulating measures, the employee’s wage should be at least R2000.00 per month if they are exempt from the national minimum wage.
If the employer is subject to the wage regulating measures, then the employee’s wage should not be less than the prescribed minimum wage for the employer’s industry. The incentive works by reducing the amount of PAYE tax that an employer is required to pay on behalf of a qualifying employee. It is important to note that the ETI is only available to employers registered for PAYE with the South African Revenue Service (SARS), and that the incentive is claimed on a monthly basis by the employer when submitting their monthly Emp201 declaration to SARS. Overall, the Employment Tax Incentive in South Africa is a valuable tool for employers looking to hire and retain young workers, as it can help to reduce the cost of doing so. Employers who are eligible for the incentive should make sure to take advantage of it to support the employment of young people in South Africa.
This programme is a great way for employers to give back to the community and contribute to the reduction of youth unemployment and economic growth in South Africa. The ETI came into effect on 1 January 2014 and it will end on 28 February 2029. LABOURNET SERVICES Our services are designed to improve business efficiencies, ensure compliance and provide you with peace of mind that your payroll administration and management activities are accurate and always accessible with one goal in mind – improving your bottom line! Choose the solution best suited to your requirements: For the matured business, access to all modules in the application to facilitate the employee’s full life cycle with technical infrastructure, system support, and expert legislative knowledge as and when required. Supported Payroll Service Not the conventional outsourcing model but rather an extension to your business, full facilitation of your payroll process from employee engagement to termination. Full Outsource Payroll Developed by leading payroll experts and developers, cloud[1]based PSIber
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Reporting is comprehensive and flexible, while processing of all statutory requirements is both simple and accurate. T: +27 (0)31 266 6570 C: +27 (0)82 786 7480 E: johanvd@labournet.com W: www.labournet.com
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