Employment Tax Incentive (ETI) Guide

What is ETI?

The Employment Tax Incentive (ETI), introduced under the Employment Tax Incentive Act, 2013, is a cost-sharing grant between the government and private employers. It encourages employers to hire young South Africans (aged 18–29) by reducing the employer's PAYE liability.

Qualifying Employee Requirements

• South African citizen with a valid SA ID
• Age 18–29 (age limit waived for employees in Special Economic Zones)
• Monthly remuneration between R2,000 and R6,500
• Not a domestic worker
• Not employed by a connected person (e.g. family member)
• Not employed by a public entity (Schedule 2 or 3 of the PFMA)

ETI Calculation (2025)

The ETI reduces the employer's PAYE payment. The incentive is calculated per qualifying employee per month:

For remuneration between R4,500 and R6,500: ETI = (6,500 − monthly remuneration) ÷ 2,000 × R1,500

How to Claim ETI

1. 1Calculate the ETI amount for each qualifying employee in your payroll system.
2. 2Declare the total ETI on the EMP201 return under the ETI field.
3. 3The ETI amount is deducted from the monthly PAYE payment. If ETI exceeds the PAYE liability, the excess carries forward to the next month.
4. 4Any remaining rollover balance is refunded twice a year during EMP501 reconciliations.