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 at the time of hire, earn at least R2,000 but not more than R6,500 per month, 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.
In the first 12 months of employment, the ETI is calculated at 50% of the monthly salary between R2,000 and R4,500, with a maximum of R1,000 per month. The incentive tapers linearly from R4,500 to R6,500, reaching R0 at R6,500. In months 13-24, the rate drops to 25% with a maximum of R500 per month.
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 18-29 at hire, earn R2,000-R6,500/month, have a valid SA ID, 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 hired after 1 October 2013.
How much is the ETI worth?
Year 1 (months 1-12): up to R1,000/month per employee. Year 2 (months 13-24): up to R500/month per employee. The maximum benefit is at R4,500 salary. Over 24 months, the total ETI per employee can be up to R18,000.
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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