2025 May Budget: National Treasury has confirmed the move to remove ad valorem excise duty on smartphones below R2 500 has been implemented.
This, after the proposal was made in the budget review document released in March, which noted no ad valorem excise duty on lower value smartphones, effective 1 April.
Ad valorem duties are the taxes levied on commodities as a certain percentage of their value, as defined in Treasury’s budget review document.
Ad valorem excise duties on smartphones were charged at a flat rate of 9%. However, to enhance smartphone affordability and support efforts to promote digital inclusion for low-income households, it was proposed that the duty rate be applied only to smartphones with a price greater than R2 500 at the time of export to SA.
Smartphone affordability has been noted as among the critical barriers to digital inclusion and mobile internet adoption.
The GSM Association’s (GSMA’s) latest data shows mobile devices, or smartphones, remain the primary method that most people in low- and middle-income countries (LMICs) access the internet, particularly women.
According to the report, the cost of an entry-level handset represents 24% of a woman’s monthly income in LMICs, compared with 12% of men’s.
While 61% of women in LMICs own a smartphone, it still leaves around 945 million women without a smartphone, 230 million fewer women than men, marking no significant change since 2023.
In 2023, GSMA Sub-Saharan Africa head AngelaWamola told ITWeb that despite Sub-Saharan Africa being the fastest-growing mobile region in the world, the availability of affordable devices still remains a hurdle.
The GSMA’s projections show 50% of the Sub-Saharan Africa population will have a mobile subscription or use mobile services by 2025. However, only 22% of the population access 3G and 4G internet, meaning 78% of the population is offline, Wamola revealed.
National Treasury principals are today in Cape Town, where finance minister Enoch Godongwana delivered a revised national budget for an unprecedented third time.
This followed the withdrawal of the value-added tax rate increases and proposed budget legislation, as well as the fiscal framework being set aside.
According to Treasury, revisions to the fiscal framework proposed in the March 2025 budget review reduce anticipated revenue and spending, but departments largely retain their baselines and frontline services are protected.
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