MARCH 2025 – SOUTH AFRICA
EMPLOYMENT TAX INCENTIVE (ETI) CHANGES PUBLISHED
It is important that employers note the following:
Latest ETI amendments published by SARS
Following the delivery of the Budget Speech on 12 March 2025, the South African Revenue Service (SARS) published the Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill on 14 March 2025.
As part of the Budget Speech documents, proposed changes to the Employment Tax Incentive (ETI) values were included in the Revenue Trends and Tax Proposals document. Effective from 1 April 2025, these changes are detailed in the Draft Bill as follows:
- The maximum salary to qualify for ETI increases from R6,500 to R7,500.
- Previously, employees earning less than R6,500 qualified for the incentive.
- Now, employees earning less than R7,500 can qualify.
- Adjustment to the ETI amounts in the first 12 months of employment
- If an employee earns less than R2,500, the employer receives 60% of that salary as an incentive (previously 75%).
- If an employee earns between R2,500 and R5,500, the employer receives a fixed R1,500 incentive.
- If an employee earns between R5,500 and R7,500, the incentive decreases gradually according to a formula.
- If an employee earns R7,500 or more, the employer receives no incentive.
- Adjustments to the ETI amounts after 12 months of employment:
- If an employee earns less than R2,500, the employer receives 30% of that salary as an incentive (previously 37.5%).
- If an employee earns between R2,500 and R5,500, the employer receives a fixed incentive of R750.
- If an employee earns between R5,500 and R7,500, the incentive decreases gradually according to a formula.
- If an employee earns R7,500 or more, the employer receives no incentive.
Thus, the ETI calculation formula will be adjusted as illustrated below:
To view the Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill, follow the link.
