3 October 2011 by

Job Creation: Taxes and contributions - less Is more

This is the year of job creation in South Africa, as announced in the Presidential address in February 2011.

But while the South African Government contemplates the introduction of a business tax to fund local government, the Federal Government of Brazil is going exactly the opposite way.

For the 12 months commencing 1 December 2011, employers in the Brazilian clothing, footwear, furniture and software sectors will benefit from a substantial decrease in social security contributions in respect of their employees. The furniture, clothing and footwear industries in Brazil will benefit by a 18.5% reduction in employer social security contributions and in the technology and software industries by a reduction of 17.5%.

The plan aims to increase the competitiveness of Brazilian industry on the domestic and foreign markets. The Brazilian Government hopes to guarantee competitiveness and thereby to generate new jobs for its employees and additional income for Brazil.

An additional tax on businesses in South Africa may have the opposite effect on employment opportunities and on the R9-billion job creation initiative of the South African Government.

Faan Coetzee

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