New tax laws for South Africa come into effect
The National Treasury has put the Taxation Laws Amendment Act of 2024 into effect.
The laws were signed by President Cyril Ramaphosa and promulgated in December 2024, but were not active.
The Amendment Act makes various changes to South Africa’s tax laws, including the Income Tax Act, VAT Act and Acts governing tax incentives.
Some of the more prominent changes are the introduction of electric and hydrogen vehicle incentives, which give a 150% tax deduction or investment allowance for new investments in the field.
Another big change is the curbing of abuse of other incentives, specifically the Employment Tax Incentive.
The government introduced the Employment Tax Incentive (ETI) in 2013 to encourage employers to hire young job seekers.
The ETI reduced employers’ costs of hiring young people through a cost-sharing mechanism with the government, while leaving the wage the employee receives unaffected.
The ETI commenced on 1 January 2014 and is due to expire on 28 February 2029.
However, over the past few years, the government was forced to amend the ETI Act to curb abuse of the incentive through aggressive tax schemes.
These schemes often involved training institutions claiming the incentive for students classified as employees under the ETI Act, who, however, never received cash payouts in their bank accounts.
Instead, the training institutions would deduct training fees from their wages.
“The misuse of the ETI for creating fictitious employment, primarily to exploit the incentive, contradicts the policy’s intention,” Treasury said.
To address this, the new laws implement punitive measures, now extended in the legislation, that will force employers caught abusing the system to pay penalties to the Treasury.
“It is essential to emphasise that millions of young South Africans are excluded from economic participation, resulting in high levels of unemployment, discouragement, and economic marginalisation,” Treasury said.
“The primary purpose of the ETI is to encourage employers to hire young job seekers, providing them with a living wage and valuable work experience for future employability.”
The new tax laws cover various other aspects, narrowing definitions, clarifying tax applications—particularly cross-border tax—and aligning the laws with the two-pot retirement system.
An explanatory memorandum from the South African Revenue Service (SARS) about the laws can be read here.
The full Act can be found below. The laws are in effect from 19 August 2026.
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