The South African government will eliminate luxury tax on smartphones under R2,500 starting April 1, 2025, to support low-income households’ digital adoption. Currently, a 9% excise duty applies, but this will only affect higher-priced devices post-cutoff. Critics fear the transition to advanced networks may widen the digital divide among low-income consumers.
The South African government will eliminate the luxury excise duty on smartphones priced below R2,500 beginning on April 1, 2025. This decision, announced by the National Treasury, aims to enhance digital adoption among low-income households. Currently, smartphones face a 9% ad valorem excise duty, which the government plans to apply solely to devices exceeding R2,500 after the stated date.
This initiative is designed to improve smartphone affordability and support digital inclusion for economically disadvantaged users. The timing of this proposal coincides with South Africa’s plan to deactivate its 2G and 3G networks by December 31, 2027, to allocate radio frequencies for advanced 4G/LTE and 5G technologies.
However, critics caution that retiring older networks may widen the digital divide, as many low-income consumers—particularly in remote regions—might struggle to purchase newer, compatible smartphones. Communications Minister Solly Malatsi acknowledged the detrimental impact of ad valorem excise duties on device pricing and indicated ongoing discussions with the Treasury aimed at reducing these costs.
The removal of the luxury excise duty on basic smartphones in South Africa represents a significant step towards bolstering digital access for low-income households. As the country transitions away from 2G and 3G networks, it is crucial to ensure that all consumers, particularly those in remote areas, can afford modern smartphones to bridge the digital divide.
Original Source: techcentral.co.za
