Frequently Asked Questions

Millions of young South Africans are excluded from participating in economic activity, and as a result suffer disproportionately from unemployment, discouragement, and economic marginalisation. High youth unemployment means young people are not gaining the skills or experience needed to drive the economy forward. This lack of skills can have long-term adverse effects on the economy.
As a South African employer, you now have a great opportunity to boost the employment of young work seekers by utilising external ETI.

External Employment Tax Incentive (“ETI”) was introduced with the objective of enabling the youth by giving them the opportunity to acquire the requisite skills to be employed.
The incentive reduces the cost of hiring young people to employers through a cost-sharing mechanism with government.
The ETI programme was promulgated in October 2013, forms part of government’s package of programs for youth Employment.
The ETI was implemented with effect from 1 January 2014 and will end on 28 February 2029.
THE ETI programme is sponsored by The National Treasury and administered by SARS, extended to 2029.
The 2022 ETI expansion budget is an extra R2,2 billion on top of the existing budget!

The cost to the employer of hiring young people is reduced, as the employer is allowed to reduce the amount of employees’ tax (PAYE) that it is required to pay to the South African Revenue Service (“SARS”).

If a qualifying employee is signed up with an eligible employer, the employer can deduct the ETI from the total amount of employees’ tax (PAYE) payable to SARS.

If the employer is registered with SARS for purposes of paying monthly PAYE to SARS, the employer will be eligible to claim External ETI.

To be eligible to claim the ETI the following criteria must be met:

• Tax returns must be up to date.
• There must be no tax debt.

An organisation must be tax compliant to be eligible to claim ETI.

An individual qualifies as an ETI Employee/Student if he or she –

• has a valid South African identity document, is an asylum seeker or refugee (with an asylum seeker permit or identity document, issued in terms of section 30 of the Refugees Act, 1998)
• is between the ages of 18 – 29.
• has never been employed.

With external the organisation may claim the ETI from the South African Revenue Service (SARS) by reducing the PAYE by R1,500.00 per employee/student that is allocated to the organisation.
External ETI which makes use of students sourced by our recruitment agency.
Unskilled and unemployed youths are given the opportunity to develop new skills to become employable.
Each year the organisation is given the opportunity to help an unskilled and unemployed youth.

With external ETI the organisation can claim the R1,500.00 per employee/student the second year as well, whereas internal ETI only allow the organisation to claim the R1,500.00 in the first year and half the next year.

External ETI gives rural employees/students the opportunity to study online, they get data to study online, this gives them the opportunity to study online for free.

An employer can claim the incentive by decreasing the amount of PAYE that is payable to SARS for every qualifying employee/student. This is done by completing the ETI field on the employer’s monthly EMP201 return to be submitted to SARS.
For each employee/student that is allocated to the organisation they can reduce the ETI by R1,500.00.

• Company tax benefit of up to 27%
• Free marketing (Done by allocated students/employees), e.g., handing out flyers, cold calling, surveys, etc.
• Covers your compulsory skills spend for B-BBEE (4%-6% of total payroll).
• Employee/Students can be employed after their training, if desired (already vetted and trained).

• Education (Multiple available courses in different industries, all accredited by SETAs and Department of Higher Education.
• All courses are online using the provided app from the training institution.
• Work Experience to add to their CV.
• R400 “stipend” every month.
• Free data for accessing the online training courses.
• Possibility of being employed by one of the organisations.

The amended B-BBEE Codes require organisations to inter alia spend between 4% - 6% of their payroll on training previously disadvantaged people, through the external ETI initiative organisations are allowed to claim Skills Development points for training previously disadvantaged people by utilising their PAYE.