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South Africa to Remove Luxury Duty on Smartphones Under 2,500 Rand

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South Africa’s government has proposed removing the luxury excise duty on smartphones priced below 2,500 rand (approximately $136.37) starting from April 1, 2025. The move, announced in the National Treasury’s budget statement, aims to increase smartphone affordability for low-income households and promote digital inclusion across the country.

Currently, a 9% ad valorem excise duty is applied to smartphones, but this will only affect higher-priced devices once the proposal is implemented. This change is expected to significantly reduce the cost of entry-level smartphones, making them more accessible to a broader segment of the population.

Key Factors Behind the Proposal:

  • The proposal is part of South Africa’s efforts to encourage digital adoption, particularly among low-income groups.
  • By eliminating the duty for smartphones under 2,500 rand, the government aims to bridge the digital divide and enhance access to technology for underserved populations.
  • This initiative coincides with South Africa’s plan to phase out 2G and 3G networks by December 31, 2027, to make room for 4G LTE and 5G networks.

Concerns and Criticism:

Some critics expressed concerns that phasing out 2G and 3G networks might worsen the digital gap for low-income users, particularly those in rural areas who cannot afford the latest devices designed for faster networks. Communications Minister Solly Malatsi noted that the high cost of smartphones, partly due to the excise duties, has been a barrier to accessibility and that discussions with the Treasury were already underway to address this issue.

The move is expected to positively impact the country’s push for greater digital inclusion and accessibility in the coming years.

Mexico Implements New Tariffs, E-commerce Giants Like Shein and Temu Could Be Affected

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Mexico’s tax authority, SAT, introduced new tariffs on Tuesday aimed at strengthening the surveillance of goods imported from Asia. This move may significantly impact popular online retailers like Shein and Temu, as both companies are based in China, which does not have an international treaty with Mexico.

Under the new regulations, goods entering Mexico through courier companies from countries without such treaties will be subject to a 19% duty. Goods entering from Canada and the U.S., which are part of the United States-Mexico-Canada Agreement (USMCA), will face a 17% duty if their value exceeds $50 but is under $117. Additionally, goods valued over $1 from countries with international treaties with Mexico will also be charged a 19% duty.

The SAT stated that the new tariffs were designed to combat “abusive practices” and that goods previously exempt from duties will now be taxed. These changes, effective from January 1, align with broader tax reforms targeting e-commerce. On December 19, President Claudia Sheinbaum’s administration announced a decree imposing import duties of up to 35% on various goods, including clothing and home products, to curb tax evasion and ensure fair competition for local businesses.

This decision could disrupt Mexico’s IMMEX program, which allows foreign companies to import goods tax-free for U.S. market sales. E-commerce giants Shein and Temu, in particular, could face challenges due to the higher tariffs, as they compete with established U.S. retailers such as Walmart and Amazon.