Employment Tax Incentive (ETI) in South Africa (2026/2027)
The Employment Tax Incentive (ETI) was introduced in January 2014 to encourage employers to hire young workers. It provides a tax incentive that reduces the amount of employees' tax (PAYE) an employer must pay to SARS, effectively subsidising the cost of employing qualifying youth for up to 24 months.
To qualify, the employee must be between 18 and 29 years old, earn less than R7,500 a month and at least the national minimum wage, have a valid South African ID, and not be a domestic worker or related to the employer. The employer must be registered for PAYE and not be in the national, provincial, or local government sphere.
From 1 April 2025, the first 12 months pay 60% of monthly pay below R2,500, a flat R1,500 from R2,500 to R5,499.99, and from R5,500 an amount that reduces by 75c for every rand, reaching nothing at R7,500. Months 13 to 24 pay half of that, up to R750 a month. Where the employee works fewer than 160 hours in the month, the pay is grossed up to 160 hours to find the amount, which is then scaled back to the hours worked.
The ETI is claimed by reducing the PAYE payment on the monthly EMP201 return. Employers do not need to apply separately for the incentive. However, they must keep adequate records to support their claims, including proof of the employee's age, South African ID, and employment dates.
Frequently Asked Questions
What is the ETI in South Africa?
The Employment Tax Incentive (ETI) is a government incentive that reduces the PAYE an employer pays to SARS for hiring young workers aged 18-29. It effectively subsidises the cost of youth employment for up to 24 months per qualifying employee.
Who qualifies for ETI?
Employees must be 18 to 29, earn under R7,500 a month and at least the minimum wage, have a valid SA ID, and not be a domestic worker or related to the employer. Employers must be registered for PAYE and not be in government. The employee must have been employed on or after 1 October 2013.
How much is the ETI worth?
Months 1 to 12: up to R1,500 a month per employee. Months 13 to 24: up to R750 a month. The full amount applies to pay from R2,500 to R5,499.99 for 160 hours or more. Over 24 months, the total ETI per employee can be up to R27,000.
How do I claim ETI?
Claim ETI by reducing your PAYE payment on the EMP201 monthly return. No separate application is needed. Simply calculate the ETI for qualifying employees and reduce your PAYE payment. Keep records of employee ages, IDs, and employment dates for SARS verification.
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