South Africa to remove luxury duty on lower value smartphones

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PRETORIA (Reuters) – South Africa’s government has proposed to remove the luxury excise duty on smartphones worth below 2,500 rand ($136.37) from April 1 to support digital adoption for low-income households, the National Treasury said on Wednesday.

Currently, so called ad valorem excise duties on smartphones are charged at a rate of 9%.

“Government proposes that as of 1 April 2025 this duty rate be applied only to smartphones with a price paid greater than 2,500 rand at the time of export to South Africa,” treasury said in its budget statement.

This proposal will “enhance smartphone affordability at the lower end of the price spectrum and support efforts to promote digital inclusion for low-income households,” it added.

The move comes as South Africa plans a total shutdown of 2G and 3G networks by December 31, 2027 to free up radio waves for faster 4G LTE and 5G networks.

Critics of the plan had argued that phasing 2G and 3G networks risked exacerbating the digital divide as many low-income consumers, particularly those in remote areas, may not afford newer smartphones designed for faster networks.

Communications Minister Solly Malatsi told Reuters last year that the ad valorem excise duties contribute to the high cost of smart devices and that he was in talks with treasury to cut these.

($1 = 18.3330 rand)

(Reporting by Nqobile Dludla; Editing by Olivia Kumwenda-Mtambo)