In a bid to increase digital accessibility, the South African government has proposed removing the luxury tax on budget-friendly smartphones—a move that could significantly impact low-income households. The proposal, set to take effect from April 1, 2025, will eliminate the 9% ad valorem excise duty on smartphones priced below 2,500 rand ($136.37), making entry-level devices more affordable.
According to the National Treasury, the removal of this tax is intended to lower the financial barrier to smartphone ownership, particularly for individuals who rely on basic mobile devices for internet access, banking, and communication. This change aligns with South Africa’s broader goal of bridging the digital divide and preparing for the transition to faster 4G and 5G networks.
A Digital Shift: Preparing for the 2G & 3G Shutdown
The decision to make smartphones more affordable comes ahead of South Africa’s planned shutdown of 2G and 3G networks by December 31, 2027. This phase-out aims to free up spectrum for newer technologies like 4G LTE and 5G, which offer better connectivity and faster data speeds.
However, the move has sparked concerns among digital rights advocates who fear that eliminating older networks could leave millions without affordable mobile access. Many low-income users in rural areas still rely on basic 2G and 3G-enabled phones that may not support faster network technologies.
By reducing the tax burden on lower-cost smartphones, the government hopes to make 4G and 5G-capable devices more accessible, ensuring that South Africans can transition smoothly when older networks are eventually phased out.
High Smartphone Costs: A Barrier to Digital Inclusion
For years, smartphone prices in South Africa have been a major barrier to digital adoption. Communications Minister Solly Malatsi previously highlighted that import duties significantly contribute to high device costs, making smartphones unaffordable for many low-income citizens.
Recognizing this challenge, Malatsi engaged in discussions with the Treasury to explore ways of reducing costs and making smart devices more accessible. The removal of the ad valorem excise duty on budget smartphones is a direct result of these efforts.
What This Means for South Africans
The exemption of low-cost smartphones from luxury taxes is expected to:
📱 Make smartphones more affordable for low-income households
📡 Encourage a smoother transition to 4G and 5G networks
💡 Boost digital inclusion and access to online services
📊 Support economic growth by enabling more people to participate in the digital economy
As South Africa moves toward a digitally connected future, policies like this play a crucial role in ensuring that no one is left behind. While challenges remain, reducing the cost of entry-level smartphones could be a game-changer for millions of people, helping to bridge the digital divide and empower previously underserved communities.
