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South Africa Publishes Update On Employment Tax Incentive

by Lorys Charalambous, Tax-News.com, Cyprus

30 August 2016


The South African Treasury has said that take up of the Employment Tax Incentive (ETI) has been strong, with ZAR6.06bn (USD419m) claimed between January 1, 2014, and March 31, 2016.

According to data released by the Treasury, 32,368 firms lodged at least one ETI claim in 2014-15. This represents 15 percent of firms with eligible employees, for whom information is held in the tax dataset. "This implies the ETI supported approximately five percent of all jobs in the tax dataset based on individual employee certificates in the 2014-15 tax year," it explained.

The Treasury added that the estimates of jobs supported are higher than the projections made when consultations were held on the ETI in 2011.

The ETI was introduced in January 2014, and aims to stimulate the employment of 18- to 29-year-olds by reducing the risks and costs associated with hiring younger workers. It decreases the amount of pay-as-you-earn tax payable for each qualifying employee hired by the employer.

Employers can claim the (maximum 50 percent) ETI on a sliding scale for any employee receiving a salary of less than ZAR6,000 a month. The ETI's value decreases by half during the second year of employment, and an employer may only claim the incentive for a two-year period for each employee.

The ETI is a temporary measure, and is scheduled to expire on December 31, 2016. The South African Parliament has requested a full review of the incentive to inform whether it should be continued, refined, or allowed to lapse.

The Treasury said that if legislative amendments are required to extend or alter the design of the ETI, draft legislation will be published within the next two months, to allow for public comment and sufficient discussion by parliament.

TAGS: South Africa | tax | business | tax incentives | employees | ministry of finance | legislation | tax breaks | revenue statistics | Employment | Africa

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