What is Employment Tax Incentive?

The Employment Tax Incentive (ETI) in South Africa is a government initiative designed to encourage employers to hire young and low-skilled workers. Here are the key aspects of the ETI:

1. Purpose

The ETI aims to reduce unemployment and promote job creation by providing financial incentives to employers.

2. Eligibility

• Employers must meet specific criteria to qualify for the incentive, including:
• Hiring employees between the ages of 18 and 29, or those over 29 who are considered "vulnerable" in the job market.
• Paying a monthly salary that meets the minimum threshold set by the government.

3. Incentive Amount

• The amount of the incentive varies based on the employee's age and the duration of their employment. Employers can receive a monthly tax deduction for each qualifying employee.
• As of the latest guidelines, employers can claim up to R1,000 per month for eligible employees under 29 and R750 for those over 29.

4. Duration

• The ETI is available for a maximum period of 24 months for each qualifying employee. After this period, employers may not claim the incentive for the same employee.

5. Tax Compliance

• Employers must be registered with the South African Revenue Service (SARS) and meet their tax obligations to claim the ETI.

6. Benefits

• The ETI not only reduces the cost of hiring but also encourages businesses to invest in training and development for new employees.

7. Application Process

• Employers can claim the ETI when submitting their PAYE (Pay As You Earn) tax returns, which simplifies the process.

Overall, the ETI is a valuable tool for fostering employment opportunities and supporting small businesses in South Africa.