The South African government has proposed eliminating excise duty on smartphones priced below 2,500 rand ($136.37) from April 1, in a bid to boost digital adoption among low-income households, the South African Finance Ministry said on March 12.

Currently, ad valorem excise duty on smartphones in the South African market is applied at a rate of 9%.

Specifically, the South African Government proposed that from April 1, this tax will only apply to smartphones with a payment value of over 2,500 rand when exported to South Africa.

Currently, ad valorem excise duty on smartphones in South Africa is applied at a rate of 9%. Illustrative photo.

The proposal is aimed at reducing the price of smartphones at the low end and supporting efforts to promote digital inclusion for low-income households, the South African Finance Ministry added.

The move comes as South Africa plans to completely shut down its 2G and 3G networks by December 31, 2027 to free up airwaves for faster 4G LTE and 5G networks.

Critics say the gradual shutdown of 2G and 3G networks could further widen the digital divide, as many low-income consumers, especially those in remote areas, may not be able to afford new smartphones designed to use faster networks.

Communications Minister Solly Malatsi said last year that excise taxes contribute to the rising cost of smart devices and he is in discussions with the Finance Ministry about reducing them.