Decision to remove smartphone tax for devices under R2 500 welcomed

The Association of Comms and Technology (ACT) has welcomed the government’s decision to exempt smartphones priced at R2 500 or less from the 9% ad valorem excise duty starting 1 April 2025.

This measure was announced by Finance Minister Enoch Godongwana in the 2025 budget tabled in Parliament on 12 March.

Smartphones, which have gradually increased in price, have historically been taxed like luxury products in South Africa, with a 9% ad valorem tax applied to the export price of the devices.

Ad valorem tax  

An ad valorem tax of 9% has historically been applied to all smartphone sales in South Africa, including motor vehicles, electronic devices, and perfume.

Treasury said the intervention was made to help lower smartphone prices at the lower end of the price spectrum.

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Affordable smart devices

Communications and Digital Technologies Minister Solly Malatsi said last month that he had taken steps to accelerate access to more affordable smart devices and smartphones.

Malatsi first mentioned lowering the price of smart devices in October last year when he initiated bold plans to expand broadband connectivity across South Africa.

Malatsi said the initiative had two parts: to lower regulatory hurdles to investment in cheap, reliable broadband.

“Second, we need to lower the price of the smart devices needed to use 4G and 5G data,” he said.

Budget

According to the budget document, lower-priced smartphones will be exempt from the ad valorem tax to make the device more affordable and support efforts to promote digital inclusion for low-income households.

“Government proposes 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.”

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Positive step

ACT said this is a positive step towards advancing South Africa’s digital inclusion agenda.

“But more work remains to be done to ensure that all citizens, particularly marginalised communities, can access and benefit from digital connectivity.

“This policy shift is an acknowledgment that affordability is a major barrier to digital access and that government interventions can play a critical role in expanding connectivity. It aligns with South Africa’s broader ambition to close the digital divide and enable universal access to digital services,” ACT said.

4G and 5G

ACT added that by reducing the cost of entry-level smartphones, the measure will support greater adoption of 4G and 5G devices, which is crucial as the country phases out 2G and 3G networks.

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