South Africa to Remove Luxury Duty on Smartphones Below 2500 Rand

South Africa plans to eliminate the luxury excise duty on smartphones under 2,500 rand from April 2025 to support digital inclusion for low-income households. This follows the government’s strategy to phase out 2G and 3G networks by December 2027, despite concerns regarding the potential digital divide it may create.

The South African government intends to eliminate the luxury excise duty on smartphones priced below 2,500 rand (approximately $136.37) effective April 1, 2025, in an effort to promote digital adoption among low-income households, as per the National Treasury’s statement on Wednesday. Currently, smartphones are subject to a 9% ad valorem excise duty.

This initiative aims to improve affordability of smartphones within the lower price range, thereby fostering digital inclusion for underserved populations. The decision aligns with the government’s broader strategy, which includes the planned discontinuation of 2G and 3G networks by December 31, 2027, to facilitate the transition to advanced 4G LTE and 5G services.

Opponents of this transition have raised concerns that the elimination of older networks could worsen the digital divide, particularly for low-income consumers in remote locations who may struggle to acquire newer smartphones compatible with upgraded networks. Communications Minister Solly Malatsi emphasized the toll of these excise duties on the affordability of smart devices and expressed his ongoing discussions with the treasury to address this issue.

In summary, South Africa’s proposed removal of the luxury excise duty on lower-priced smartphones, targeted to take effect in April 2025, seeks to enhance digital accessibility for low-income households. As the nation moves towards phasing out older mobile networks in favor of more advanced technologies, addressing the needs of economically vulnerable consumers remains crucial. The government aims to bridge the digital divide while promoting technological advancement in the telecommunications sector.

Original Source: www.tradingview.com