South African businesses have been reminded that their first monthly claim for the Employment Tax Incentive (ETI), which came into effect on January 1 2014, should be submitted by February 7, 2014. The ETI is an incentive mainly aimed at encouraging employers to hire young and less experienced workers, by reducing the cost to employers of hiring employees between the ages of 18 and 29 through a cost-sharing mechanism with the Government.
The new tax incentive will function by decreasing the amount of pay-as-you-earn tax that is payable to the South African Revenue Service (SARS) for every qualifying employee that is hired by the employer. There will be no change in the wages that the employee receives but the effective cost of hiring the employee will be lower.
