Call for youth employment credit claim to be short term Minister Mthuli Ncube

Prosper Ndlovu, Business Editor

TREASURY should consider shortening the Youth Employment Tax Credit claim period in view of inflation pressures and come up with a clear monitoring and evaluation framework to ensure maximum economic benefit from the fiscal intervention.

Finance and Economic Development Minister, Professor Mthuli Ncube, proposed in his 2020 National Budget, a tax credit of ZWL$500 per month per employee for corporates that employ additional youth employees in a year of assessment. The tax credit will only be claimed after the additional employee has served a period of 12 consecutive months and concerned youth workers should be aged 30 years and below at the time of employment.

The credit scheme, which comes into effect as from tomorrow, will be limited to a maximum of ZWL$60 000 per year of assessment and is guided by a number of conditions meant to incentivise job creation.

Commenting on the matter, the Lupane State University (LSU)’s Business Clinic, a commercial enterprise-focused unit within the institution’s Faculty of Commerce, described the move as “a good initiative” for the creation of employment for the youth in the nation. It said that the conditions attached to the tax credit were “quite reasonable” but suggested shortening of the credit claim timeline and tightening of monitoring and evaluation.

“This (credit scheme) could create a change in the nation, but there is need for a clear framework for the monitoring and evaluation of the scheme. With the high level of corruption, there is risk that some organisations will enjoy the credit without even abiding by the conditions,” said the institution. 

“It is also noted that the ZWL$500 per employee per month shall only be claimable in 2021 assuming the organisation employs the youth in January 2020. 

“With the rate of inflation currently obtaining in the country, this may not be seen as an incentive to employ the youth as the credit does not appear to be a short-term benefit. With the urgency of the matter, immediate incentives could have been ideal.”

Among the conditions for the tax credit scheme is that a beneficiary company should be registered for Personal Income Tax and be compliant for the preceding tax period. For the purposes of the incentive Treasury has explained that the term, “employee” excludes a trainee, intern and apprentice and that minimum wage payable to new employees should be at least ZWL$2 000 per month. Furthermore, 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. 

In order to stimulate production and cushion the workers, Prof Ncube has also proposed a number of tax concessions including a downward review of VAT from 51 percent to 14,4 percent, reduction from 25 percent to 24 percent corporate tax, duty rebates for key industrial sectors and widening of tax-free thresholds for salaries and bonus earnings. 

You Might Also Like

Comments