Licence fees : the current state of play : capital allowances

In 2002 the Gauteng Income Tax Special Court was presented with the following facts : The taxpayer responded to an invitation to tender from the then Minister of Transport and Telecommunications for a licence to conduct a non-exclusive cellular telephone service for a renewable period of 15 years. The taxpayer won the tender and, in addition to an "initial basic cellular licence fee" of R100 million, was required to pay an ongoing annual licence fee of 5% of its net revenue.