Government introduces tax incentives for companies that hire young people
In order to promote the employment of many jobless young people across the country, the government has come up with tax incentives for companies employing youths.
Presenting the ZWL$58, 6 billion 2020 National Budget in Parliament Thursday, Finance and Economic Development Minister, Mthuli Ncube, introduced a Youth Employment Tax Incentive (YETI).
The measure, which takes effect from 1 January 2020, would reduce employers’ cost of hiring young people through a cost sharing mechanism.
“Under the 2020 Budget, a fiscal incentive is being introduced to support employers who generate jobs for our young job seekers,” said Ncube.
“Any additional job created will attract a percentage tax credit to the employer.
This measure will reduce the employers cost of hiring young people through a cost-sharing mechanism with government. “
The Finance Minister further explained, to operationalise YETI, his ministry would work closely with the Zimbabwe Revenue Authority, Ministry of Justice, Ministry of Labour, Employers Confederation of Zimbabwe and other relevant stakeholders to work out the respective legal and administrative framework.
“Mr. Speaker Sir, I have already alluded to the need for tax incentives in support of job creation, which is key to sustainable economic development, I therefore, propose to introduce a tax credit of ZWL$500 per month per employee for corporates that employ additional employees in a year of assessment,” said Ncube.
“The credit will, however, be limited to a maximum of ZWL$60 000 per year of assessment.”
He added the support framework to be published through regulations, would target employers who meet certain conditions.
Ncube explained: “The company should be registered for Personal Income Tax and compliant for the preceding tax period; tax credit will only be claimed after the additional employee has served a period of 12 consecutive months; employees should be aged 30 years and below at the time of employment.”
He added: “For the purposes of the incentive, “employee” excludes a trainee, intern and apprentice; the minimum wage payable to new employees should be at least ZWL$2 000 per month; the tax credit will not apply to supervisory grades; and the tax credit will not apply to corporates with a turnover exceeding an equivalent of US$1 million.”
Young people constitute the bulk of the unemployed Zimbabweans with unofficial statistics pegging the unemployment rate at over 80 percent.