Employment Tax Incentive Updates

Written By MARISKA MALAN

Recent amendments to the Employment Tax Incentive (ETI) legislation, effective 1 April 2025,

could significantly benefit your business if you employ young South Africans.

 

What is the ETI?

The ETI is a government initiative introduced to encourage employers to hire young work seekers (aged 18–29) by reducing the cost of employment through a PAYE tax incentive.

This incentive is available to eligible employers for a maximum of 24 months per qualifying employee.

 

The ETI:

  • Reduces PAYE liability without affecting the employee’s wage

  • Applies to qualifying employees earning less than a set monthly remuneration

  • Is available to employers who are registered for PAYE and meet certain criteria

 

What’s New from 1 April 2025?

 The 2025 Draft Revenue Laws Amendment Bill has proposed increased ETI values, effective 1 April 2025, as follows:

  • Increased ETI cap from R2 000 to R2 500 per month for employees working 160 hours or more

  • Adjusted pro-rata calculations for employees working fewer than 160 hours

  • Increased remuneration threshold from R6 500 to R7 500

 

The revised incentive amounts for qualifying employees are:

Monthly Remuneration ETI: First 12 Months ETI: Second 12 Months

R0 – R2 499.99 60% of remuneration 30% of remuneration

R2 500 – R5 499.99 R1 500 R750

R5 500 – R7 499.99 Sliding scale Sliding scale

These values will apply for a period of 12 months, subject to the enactment of the proposed legislation.

 

Why Consider Claiming ETI?

Hiring youth with little to no experience often carries additional cost and risk. ETI helps bridge that gap by allowing businesses to offset a portion of this cost against PAYE,

while also investing in the future workforce of South Africa.

 

Who Qualifies?

To claim ETI, you must:

  • Be registered for PAYE

  • Employ qualifying individuals aged 18–29 (unless in a Special Economic Zone)

  • Ensure employees are not domestic workers, connected persons, or paid below the minimum wage or R2 000 (if no sectoral determination applies)

 

Ensuring compliance is essential, as penalties may apply for non-compliance or underpayment of qualifying wages.

For more information visit: Employment Tax Incentive (ETI) | South African Revenue Service

 

Do not hesitate to contact us should you require assistance in reviewing your employee records or calculating your potential monthly ETI claim.

MARISKA MALAN
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