South Africa’s government plans to remove the luxury excise duty on smartphones under 2,500 rand starting April 1, aimed at supporting digital inclusion for low-income households. The current 9% duty will apply only to higher-priced devices from 2025, coinciding with the planned phase-out of 2G and 3G networks by 2027.
The South African government is set to eliminate the luxury excise duty on smartphones priced below 2,500 rand (approximately $136.37), effective April 1. This decision aims to foster digital adoption among low-income households, as announced by the National Treasury. Currently, an ad valorem excise duty of 9% is imposed on smartphones, but it will be limited to higher-priced devices starting in 2025.
This initiative is expected to enhance affordability for lower-cost smartphones, promoting digital inclusion within economically disadvantaged communities. The move coincides with South Africa’s plan to phase out 2G and 3G networks by December 31, 2027, in order to allocate spectrum for more advanced 4G LTE and 5G technologies.
However, there are concerns that discontinuing older networks may deepen the digital divide, as many low-income consumers, particularly those in rural regions, may struggle to acquire newer smartphones compatible with advanced networks. Communications Minister Solly Malatsi previously indicated that excise duties contribute to the high prices of smart devices and expressed intentions to reduce these taxes in collaboration with the treasury.
In summary, South Africa’s proposal to abolish luxury excise duties on lower-value smartphones is designed to facilitate digital access for low-income households. This strategic decision aligns with broader efforts to upgrade telecommunications infrastructure while addressing the potential challenges posed by the transition to newer technologies. The government aims to balance digital inclusion with the necessary advancements in network services.
Original Source: www.tradingview.com
