Trusts and estate structures in Nigeria now face higher tax exposure, with trust income taxed as ordinary income at up to 25 percent, alongside expanded disclosure requirements that subject trustees to closer oversight.
Capital gains earned within trust structures are no longer taxed separately at 10 percent but are treated as ordinary income, increasing liabilities for families and corporate trustees who use trusts to hold assets and transfer wealth.
The shift means gains within trusts are no longer shielded by the 10 percent capital gains rate. According to Kelechi Ibe, co-founder of Taxstream and a former KPMG tax adviser, they are now treated as ordinary income and could be taxed at marginal rates of up to 25 percent.
“While they used to be structuring arrangements to tax certain income as capital gains at a lower rate of 10 percent, that structuring is now impacted because there is no separate regime for capital gains anymore,” Ibe said, speaking at a Vetiva Trustees Limited webinar titled Building Legacy and Governance in the New Tax Era.
“Every gain from the disposal of an asset is now taxed as income tax.”
For families holding shares, real estate, or other appreciating assets in trust, marginal rates could rise to 25 percent depending on the beneficiary’s income level.
Ibe noted that although deductibles may reduce the final figure, “there is actually an increase in the tax families, trustees, settlers, and beneficiaries bear under the new regime.”
Ijeoma Uche, senior manager at KPMG Nigeria, confirmed the broader implications of this change. “One of the most significant shifts is the consolidation of trusts and estates into a single unified national tax framework,” she said.
She explained that the law now includes tighter residence, source, and attribution rules, meaning tax authorities will scrutinize any income linked to Nigeria, whether it’s held at the trustee level or distributed to beneficiaries.
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The law now clearly sets out how trust income and asset disposals are taxed, alongside tighter residence, source, and attribution rules. This stricter treatment of trust income comes as authorities continue efforts to strengthen revenue collection more broadly.
Nigeria’s tax-to-GDP ratio has climbed to about 13.5 percent as of late 2025, up from below 10 percent in previous years, reflecting improved collections.
Yet it remains short of the 15 percent benchmark widely seen as the minimum for sustainable state capacity and below the levels recorded by several African peers, with authorities targeting 18 percent by 2027.
Within this context, areas that previously operated with limited scrutiny, including private trust arrangements, are drawing closer attention.
Beyond rates, compliance requirements are expanding. Uche said trustees must now make fuller disclosures, including beneficial ownership details, distributions, and foreign assets.
“If you’ve had tax planning strategies you put together in the past using a trust, you would need to go back and take a look at that,” she said. “It is no longer business as usual.”
David Apaflo, managing partner at Shells Professional Services, explained that certain structures may be subject to closer review. Revocable trusts, where the settlor retains power to cancel the arrangement, and structures where the settlor maintains substantial control, could see income attributed directly to the settlor.
“In those instances, any income earned by the trust is basically seen as income earned by the settlor for tax purposes,” he said.
The law also allows tax authorities to disregard arrangements set up mainly to avoid tax. “The tax authorities can set aside any trust structure they feel the sole purpose was to evade taxes,” Apaflo added.
Trustees remain responsible for compliance. According to Ibe, they must ensure correct reporting and proper allocation of income among beneficiaries.
“The trustee will be answerable for everything that relates to the trust,” he said, citing provisions that require disclosure of changes to beneficiaries and other trust details.
While the framework includes rules to reduce double taxation through apportionment and foreign tax credits, cross-border arrangements may still require careful review.
Advisers say families with existing trusts should review their deeds, particularly the powers retained by settlors and how transactions within the trust are structured.
“The changes that will happen for each trust depend on the unique provisions in the deed, but the powers the settlor still has over the trust are one very important area to look at,” Apaflo said.
Trusts remain legal estate planning tools, but income and gains are now subject to clearer taxation and stronger disclosure rules. For families yet to reassess their structures, the financial impact could be direct and immediate.
