South Africa’s major telecommunications operators have lauded finance minister Enoch Godongwana’s announcement that luxury duties on basic smartphones will be scrapped.
The decision, which was championed by communications minister Solly Malatsi, is aimed at bridging the digital divide and making it easier for lower-income consumers to move to 4G and even 5G devices ahead of the planned shutdown of 2G and 3G networks in South Africa.
Currently, ad valorem excite duties on all smartphones are imposed at a rate of 9% of the cost of the device.
“Government proposed that as of 1 April 2025, this duty rate be applied only to smartphones with a price paid greater than R2 500 at the time of export to South Africa,” national treasury said in its budget statement on Wednesday.
This move will “enhance smartphone affordability at the lower end of the price spectrum and support efforts to promote digital inclusion for low-income households”, treasury said.
Nomvuyiso Batyi, CEO of the Association of Comms & Technology (ACT) – an industry body that represents South Africa’s six largest telecommunications operators – told TechCentral that the proposal to exempt low-cost smartphones from the 9% ad valorem excise duty is a “significant step forward in driving digital inclusion and ensuring that more South Africans – especially those in low-income households – can access affordable, internet-enabled devices”.
Barrier to connectivity
“ACT has been at the forefront of advocating for policy reforms that support widespread digital adoption. Over the past few years, we have actively engaged with government, original equipment manufacturers and other stakeholders to push for the removal of excessive taxes on smart devices, which have long been a barrier to connectivity,” Batyi said.
“This proposed tax adjustment is a direct result of those efforts and aligns with our broader mission of making digital services accessible to all.”
She said the timing of Godongwana’s announcement is “critical” given the industry’s “ongoing transition away from legacy 2G and 3G networks”.
Read: Tax break plan may lure China to build electric cars in South Africa
“For the digital economy to be successful, South Africans must have access to affordable 4G- and 5G-enabled smartphones. This tax exemption will make a tangible difference in achieving that goal and ensuring that no one is left behind in the digital economy,” Batyi said.
Charles Molapisi, MTN South Africa’s CEO, told TechCentral that the move is a “positive step towards bridging the digital divide and making essential technologies more accessible to a larger segment of South African society”.
“By cutting the luxury tax, more customers who still rely on older technologies such as 2G and 3G will have the opportunity to afford basic 4G smartphones,” Molapisi said.
A Vodacom spokesman said via e-mail that the move by national treasury – supported by minister Malatsi – is “sincerely welcomed”.
“Removing the ad valorem taxes for lower-cost smartphones is a significant step towards improving the affordability of smartphones for those that have limited economic means and is expected to have a meaningful impact on 4G device adoption.
Read: Comms minister in big push for cheaper smartphones
“The next step in assisting customers transition to 4G terminals is for government to review the extent to which VAT is levied on smartphones. This will assist to further reduce the affordability gap.”
The Vodacom spokesman said Wednesday’s announcement is a “significant step towards ultimately sunsetting legacy technologies” but other aspects of the transition to new platforms must be addressed, including replacing internet-of-things devices that are dependent on older networks. – © 2025 NewsCentral Media
Get breaking news from TechCentral on WhatsApp. Sign up here.
Don’t miss:
