South Africa to Remove Luxury Tax on Smartphones to Boost Digital Inclusion

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2 weeks ago admin

In a move to make smartphones more accessible to low-income earners, the South African government has announced plans to eliminate the luxury excise tax on mobile devices priced below 2,500 rands. This change, set to take effect on April 1, 2025, is part of the national treasury’s broader initiative to drive digital inclusion and expand smartphone adoption.

Currently, smartphones in South Africa are subject to an ad valorem excise duty of 9%, in addition to Value Added Tax (VAT) and standard import duties. This tax structure significantly raises the cost of mobile devices, making them less affordable for lower-income households. By lifting this tax on budget-friendly smartphones, the government aims to reduce financial barriers and encourage wider mobile connectivity.

South Africa has seen steady growth in smartphone penetration over the years. According to Statista, the penetration rate is projected to rise to 39.05% by 2029, marking nearly a 12% increase from 2024. Meanwhile, data from GSMA Intelligence shows that the country had approximately 124 million mobile connections at the start of 2025, despite a total population of 64.4 million. Many users maintain multiple connections, contributing to this high figure.

The removal of the luxury tax aligns with South Africa’s broader digital strategy, which includes phasing out older 2G and 3G networks by December 31, 2027. This transition, outlined in the Next Generation Radio Frequency Spectrum Policy, aims to free up bandwidth for faster and more advanced 4G LTE and 5G services. By discontinuing outdated networks and promoting smartphone affordability, the government seeks to enhance connectivity and prepare the country for future technological advancements.