Tax and Legal NewsThe Taxation Laws Amendment Bill No 18. of
2019 (TLAB) was issued on 30 October 2019 andseeks to align the ETI
Act No. 26 of 2013 (ETI Act) to other related Acts. Updating the
ETI to align with the national minimum wage (NMW)
— With effect from 1 January 2019, the National Minimum Wage Act
No. 9 of 2018, (the NMW Act) requires
employers to remunerate employees at a minimum rate of R20 per
hour [1].— Although the NMW was effective from 1 January 2019, it
did not qualify as a “wage regulating measure”
for the purposes of the ETI Act.— The NMW has now been included
as one of the eligibility criteria for purpose of claiming the
ETI.— Should the TLAB be enacted in its current form, the minimum
wage payable to an employee for purposes
of the ETI will be the higher of the:o amount payable by virtue
of a wage regulating measure (eg. a binding bargaining council
agreement)
applicable to that employer; or
o the NMW (i.e. R20 per hour); or
o the amount stipulated under Schedule 2 of the NMW Act (i.e.
learnership allowances).
— It is clear from the Explanatory Memorandum on the Draft TLAB,
2019, that the minimum wage of R2 000is intended to remain in place
for categories of workers or companies that may be exempt from the
NMWor sectors where a lower minimum wage rate applies.
— Consequently, if the amount of the wage payable to an employee
by an employer is not subject to anywage regulating measure, or the
NMW Act does not apply[2], or if an employer or an
employers’organisation is exempt from the NMW Act, the minimum wage
of R2 000 per month remains in place.Employers in sectors where a
lower minimum wage applies for example, in respect of
learnerships,should therefore still be able to claim the ETI.
— The NMW of R20 per hour does not apply if the worker has
concluded a learnership agreement with theemployer, as contemplated
in section 17 of the Skills Development Act, 1998. In these
circumstances thehigher of the wage regulating measure or the
amount stipulated in Schedule 2 of the NMW will apply.
— The above amendment to the minimum wage is retrospective and
will be deemed to have come intooperation on 1 August 2019.
Clarifying the interaction between the ETI and the Special
Economic Zone (SEZ) Provisions
— Where an employer operates through a business located within a
SEZ, that employer can benefit fromthe ETI in respect of employees
who render services to that employer within a SEZ, without having
theage limit as a restriction. This is known as the extended
incentive.
— Currently, the ETI Act is not aligned to the SEZ rules
contained in section 12R of the Income Tax Act No.58 of 1962
(Income Tax Act), and there are no specific criteria that must be
met by employer companiesoperating within an SEZ in order to
benefit from the ETI.
— According to the Explanatory Memorandum on the Draft TLAB,
2019, Government’s intention was toallow only qualifying companies
in terms of section 12R of the Income Tax Act to claim the
extendedincentive.
— The definition of SEZ in the ETI Act will be amended to align
it to section 12R of the Income Tax Act.— Only an employer that is
a qualifying company for purposes of claiming any of the income tax
incentives
under the SEZ regime can claim the ETI without any age
restriction.— The amendment will be prospective and comes into
operation on 1 March 2020. This should allow non-
From: Rea, Robert-WASH CTo: Grams, John W; Valladares, Christine
MSubject: Nov 15 / need a PDF please / South AfricaDate: Friday,
November 15, 2019 8:54:57 AMAttachments: image001.png
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Importance: High
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qualifying companies operating in a SEZ, who are claiming the
ETI without the age restriction, sufficienttime to transition.
Contact us
Melissa DuffyDirector, Global Mobility ServicesEmail:
[email protected] Tel: +27824481989
Natasha RohhamlalAssociate Director, Global Mobility
ServicesEmail: [email protected]: +27827195689
Cecilia MaddenAssociate Director, Global Mobility ServicesEmail:
[email protected] Tel: +27827195658
RegardsKPMG Tax & Legal
__________________
1 The NMW of R20 per hour does not apply to farm workers,
domestic workers, workers employed on an expanded public works
programme, and workers whohave concluded learnership agreements
contemplated in section 17 of the Skills Development Act, 1998.
2 to certain workers and their employers which are members of
the South African National Defence Force, the National Intelligence
Agency and the South AfricanSecret Service.
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[2] to certain workers and their employers which are members of
the South African National Defence Force, the National Intelligence
Agency and the SouthAfrican Secret Service.
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