When employee welfare crosses the tax line: The G4S fairness lesson

G4S Secure Solutions (Uganda) Ltd v Uganda Revenue Authority, TAT No 98 of 2024

They say no good deed goes unpunished, and in Uganda’s tax world, that saying might just have a URA stamp on it.

Picture this: An HR manager beams proudly as she shares a report, “We’ve improved staff welfare this quarter. Meals are now free for everyone!” Applause fills the room. After all, feeding employees feels noble, almost moral, a sign that the company values people beyond profit.

To most executives, it’s an act of fairness. But to the taxman, fairness sometimes comes with a price tag. One bright morning, a letter lands on the HR desk, “PAYE Assessment Notice.” Suddenly, the fairytale turns into a tax tale. The villain? Not greed or fraud, but generosity itself.

And that’s exactly what happened in the famous G4S Secure Solutions (Uganda) Ltd v Uganda Revenue Authority, Tax Appeals Tribunal Application No. 98 of 2024, decided on 13th October 2025. What began as an act of staff welfare soon became one of Uganda’s most defining PAYE cases, redrawing the line between kindness and compliance.

Employee welfare, by its everyday meaning, embodies care, meals, housing, transport, insurance, and comfort offered to make the workplace humane.

But in the tax world, “welfare” isn’t judged by kindness; it’s judged by benefit. The moment a welfare item can be valued, enjoyed, or confined to certain staff, it tiptoes into the taxable zone of non-cash benefits.

In G4S’s case, the company provided meals to its guards and staff, seemingly fair, since it was part of promoting equality and staff morale. But URA disagreed.

Their argument was simple yet piercing: if one employee gets more or better meals than another, the principle of equal treatment collapses, and where fairness ends, taxation begins.

Behind this dispute lies a deeper struggle faced by hundreds of Ugandan companies that I have come across, from security firms and manufacturing plants to banks and NGOs.

Every year, they invest millions in staff welfare, lunches, fuel allowances, medical care, school fees, or accommodation, only to later face PAYE assessments claiming these were taxable benefits in disguise. URA’s lens is sharp: if a benefit is selective, quantifiable, or exclusive, it falls under the tax net.

Yet, many employers plead that their intentions were pure. They didn’t enrich employees; they simply leveled the field. But as the G4S ruling now clarifies, fairness in taxation is not about intent, it’s about uniformity. A welfare benefit becomes taxable the moment it fails the equality test.

And that’s the tie-breaking rule the court illuminated: “True fairness under tax law is not what a company feels is fair, but what is equally accessible and quantifiable to every employee under similar terms”.

The case arose from a PAYE assessment issued by URA on what it termed non-cash employment benefits provided by G4S to its employees. G4S, one of Uganda’s largest security companies, employed thousands of guards deployed at various client sites across the country.

As part of its staff welfare policy, the company provided meals to guards during working hours, particularly those on long or night shifts. According to G4S, this was a measure to ensure efficiency, safety, and staff morale, not a reward or an additional income.

However, during a routine PAYE audit, URA discovered inconsistencies in how the meals were provided. Some guards received meals of higher value depending on their deployment sites, while others were given meal allowances instead of physical meals. In certain locations, no meals were provided at all.

URA took the position that this inconsistency created a taxable differential benefit, effectively, an income in kind subject to Pay As You Earn (PAYE) under Section 19(1)(a) of the Income Tax Act (Cap. 340). Consequently, URA issued an assessment to G4S for unpaid PAYE, arguing that the company had extended a non-cash employment benefit that must be taxed.

The main question for determination was: Whether the meals provided by G4S to its employees constituted a taxable benefit under the Income Tax Act. In simpler terms: was this welfare or was it income?

G4S maintained that the meals were operationally necessary, not part of remuneration but an expense to facilitate the nature of their guards’ work, many of whom could not leave their stations during shifts. They argued that the provision of meals was uniform in spirit, even if execution differed slightly across sites due to logistical and client variations.

URA countered that tax law does not test spirit, it tests equality and value. Since not every employee received the same or equivalent meal benefit, fairness under tax law was broken.

In defence, G4S argued that the meals provided to its security guards and staff were purely a welfare measure aimed at promoting efficiency and discipline rather than a form of remuneration.

The company maintained that these meals were operational necessities, not benefits of monetary value or personal enrichment. According to G4S, Section 19(1)(a) of the Income Tax Act applies only to benefits derived directly from employment contracts, whereas the meals were incidental facilities meant to support the nature of their work, not contractual entitlements.

URA countered that the meals qualified as benefits in kind, as employees clearly derived personal value from consuming them. Citing the Income Tax (Employment Income) Regulations, URA argued that any non-cash advantage with an ascertainable value falls within taxable employment income.

Furthermore, because the meals were not provided uniformly, with some employees receiving more or better meals than others, URA contended that the benefit became selective and therefore taxable under PAYE.

In its ruling delivered on TAT upheld URA’s position, holding that the meals provided by G4S Secure Solutions (Uganda) Ltd constituted taxable employment income within the meaning of Section 19(1)(a) of the Income Tax Act.

The Tribunal found that the welfare policy was applied inconsistently, some employees received meals of varying quality while others received cash allowances or none at all, creating unequal treatment that converted the welfare initiative into a quantifiable non-cash benefit.

It emphasized that an employer’s good intentions cannot override statutory interpretation, stating that fairness in taxation is not subjective but measurable in uniformity and value. Consequently, the Tribunal upheld URA’s PAYE assessment and directed G4S to account for tax on the meals provided during the audit period.

The G4S ruling firmly established what tax practitioners now call the “Equality Test” in Uganda’s PAYE jurisprudence. Under this principle:

A welfare benefit is taxable if it is not available to all employees on equal terms and quantifiable value.

Employer intention (such as boosting morale or efficiency) is irrelevant if the outcome creates disparity.

Operational necessity does not exempt a benefit from tax if it confers measurable personal advantage.

This ruling has since become the reference point for interpreting Section 19(1)(a), redefining how companies handle meals, allowances, housing, and other welfare initiatives.

The G4S v URA decision now stands as a cautionary tale for employers across all sectors, security firms, manufacturing plants, banks, NGOs, and even government projects. It teaches that in the realm of tax, fairness is mathematical, not emotional. Every welfare policy must now pass two critical tests:

• Is it available to all employees in similar roles?

• Can its value be objectively measured or justified?

If the answer to both is yes, it’s likely safe from PAYE. If no, it’s likely taxable.

As a tax practitioner, the G4S ruling offers three critical takeaways for employers and tax practitioners: welfare initiatives must be clearly anchored in written policy rather than goodwill, fairness should be routinely audited to ensure consistent treatment of employees, and proactive consultation with tax advisors is essential, because preventing PAYE exposure is far less costly than defending assessments.

For the employees of G4S, this decision is more than a legal outcome, it’s a landmark recognition that their welfare story has reshaped national tax thinking. Congratulations! You have redefined fairness for every employee in Uganda.

The writer is a chartered Accountant and a Chartered Tax Advisor