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South Africa Issues Employment Tax Incentive Guide

by Lorys Charalambous, Tax-News.com, Cyprus

18 August 2016


The South African Revenue Service (SARS) has issued a guide on the employment tax incentive (ETI), which has been available since January 1, 2014.

The ETI is a temporary tax incentive to encourage employers to hire workers between the ages of 18 and 29, or those of any age in special economic zones. The incentive applies to qualifying employees employed on or after October 1, 2013, and will end on January 1, 2017.

The ETI functions by decreasing the amount of pay-as-you-earn tax that is payable to SARS for every qualifying employee that is hired by the employer. Employers can claim the (maximum 50 percent) ETI on a sliding scale for any employee receiving a monthly salary that is less than ZAR6,000 (USD450) per month.

The incentive's value decreases by half during the second year of employment. An employer may only claim the incentive for a two-year period for each employee.

The guide emphasizes that, in order to be eligible for claiming the ETI, it is crucial that the employer complies with all its tax obligations. An employer will not be eligible to claim the ETI in any month in which it has outstanding tax returns or an outstanding tax debt.

TAGS: individuals | South Africa | tax | business | tax incentives | revenue guidance | employees | tax authority | tax breaks | individual income tax | Africa

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