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South Africa Clarifies Rules For Employment Tax Incentive

by Lorys Charalambous, Tax-News.com, Cyprus

05 June 2017


The South African Revenue Service (SARS) has released draft guidance to help employers establish whether the arrangements with their staff are eligible for the Employment Tax Incentive.

The ETI aims to encourage employers to hire young workers by reducing the amount they have to remit to the Government through the pay-as-you-earn system.

For an employer to benefit from the ETI, the employee must, among other things, be 18 to 29 years old, not be a domestic worker, not be "connected" to the employer, be paid a wage of between ZAR2,000 (USD154) and ZAR6,000 a month, and be employed and paid remuneration for working at least 160 hours in a month.

The South African Revenue Service (SARS) says there has been uncertainty as to whether the 160-hour requirement relates to only ordinary hours of work or whether overtime may also be included. SARS has now confirmed in a new Binding General Ruling that overtime hours cannot contribute to the 160-hour total; "it must be met by virtue of only ordinary hours of work," it said.

SARS has invited comments on the draft BGR by June 23, 2017. If implemented unaltered, the BGR will apply from March 1, 2017.

TAGS: South Africa | employees | legislation | Employment | Africa | Tax

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