South Africa plans to remove luxury excise duty on smartphones under 2,500 rand by April 1, 2025. This move is designed to enhance affordability and promote digital inclusion among low-income households, coinciding with the planned shutdown of older network technologies by 2027.
The South African government has announced its intention to eliminate the luxury excise duty on smartphones priced below 2,500 rand ($136.37) starting April 1, 2025. This initiative, articulated by the National Treasury, aims to advance digital adoption among low-income households, which are often hindered by the high costs associated with smart devices. Presently, smartphones are subject to a 9% ad valorem excise duty, a burden that the government seeks to alleviate to enhance smartphone accessibility.
According to the National Treasury, the adjustment of the duty rate is expected to facilitate affordability, particularly within the lower segments of the smartphone market. This change is part of broader efforts to promote digital inclusion, especially in light of the impending shutdown of 2G and 3G networks by December 31, 2027. This shutdown aims to reallocate radio frequencies towards the development of faster 4G LTE and 5G networks.
However, some critics have raised concerns that the discontinuation of 2G and 3G services could worsen the digital divide. Many low-income citizens, especially in rural regions, may find it challenging to purchase devices compatible with newer network technology. Communications Minister Solly Malatsi acknowledged these concerns, indicating that discussions with the Treasury regarding reductions in excise duties were ongoing to lower the costs of smart devices.
In summary, South Africa’s proposal to eliminate the luxury excise duty on lower-value smartphones is a strategic move aimed at improving digital access for low-income households. By making smartphones more affordable, the government hopes to bridge the digital divide as the nation transitions to more advanced network technologies. Nevertheless, challenges remain, particularly regarding the impact of network discontinuations on consumers who may not be able to afford newer devices.
Original Source: www.tradingview.com
