Unemployment levels in South Africa are of the highest in the world. Rates consistently exceeding 20% include a large portion of our youth, the very generation that the future of our country depends on.

In an effort to address this challenge, the employment tax incentive (“ETI”) scheme created under the Employment Tax Incentive Act, No 26 of 2014 (“ETI Act”) was introduced with the purpose to encourage employers to employ young job seekers, by giving an incentive and tax benefit for the employer.

Emigration lawyers and consultants have noted a significant increase in the number of South Africans applying for financial emigration over the past 2 years.  Many of these applications have been made in response to the proposed tax legislation changes which will come into effect from 1 March 2020, whereby South African tax residents working abroad will be required to pay tax of up to 45% on their foreign employment income which exceeds R1 million. All fringe benefits earned, e.g. housing and travel, as part of the expatriate’s remuneration package, will also be taken into account for purposes of calculating the income to be subject to this taxation.

In an ever evolving business world with labour related issues becoming increasingly complex, many businesses are considering alternatives to obtain the resources and skills required. Examples of such alternatives include the use of independent contractors, labour brokers and personal service providers, among others. In many instances these provide simplified solutions to meet the immediate business need, but more often than not, these could lead to increased tax complexities, especially in relation to employees’ tax.