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In a bid to make smartphones more affordable for low-income households, the South African government has announced plans to eliminate the luxury excise tax on mobile devices priced below 2,500 rands. Set to take effect on April 1, 2025, this policy shift is part of the national treasury’s broader strategy to drive digital inclusion and increase smartphone penetration across the country.
Reducing Costs to Improve Access
Currently, smartphones in South Africa are subject to a 9% ad valorem excise duty, in addition to Value Added Tax (VAT) and standard import duties. These taxes significantly inflate the price of mobile devices, making them less accessible to lower-income consumers. By removing this tax on budget-friendly smartphones, the government aims to lower financial barriers and encourage wider mobile connectivity.
Rising Smartphone Adoption in South Africa
Smartphone penetration in South Africa has been steadily increasing. Statista projects that the penetration rate will reach 39.05% by 2029, marking a nearly 12% increase from 2024. Additionally, GSMA Intelligence reports that South Africa had approximately 124 million mobile connections at the start of 2025, despite a total population of 64.4 million—indicating that many individuals maintain multiple mobile connections.
Aligning with South Africa’s Digital Strategy
The removal of the luxury tax is in line with South Africa’s Next Generation Radio Frequency Spectrum Policy, which includes phasing out outdated 2G and 3G networks by December 31, 2027. This transition aims to free up bandwidth for faster 4G LTE and 5G services, enhancing nationwide connectivity and preparing the country for future technological advancements.
By making smartphones more affordable and upgrading the network infrastructure, the South African government is taking a significant step toward digital transformation, ensuring that more citizens can access the opportunities of the digital economy.
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