Section 3D of the Trustees (Perpetual Succession) Act defines a family trust as one, whether living or testamentary, partly charitable or non-charitable, is registered and incorporated for the purposes of planning or managing personal estates. Trusts themselves are taxable entities, but the taxation of property within a trust and to the trust depends on the nature of the trust and the beneficiaries. The Finance Act of 2021 introduced a number of amendments to several laws, including the Income Tax Act and the Stamp Duty Act.

One of the outstanding provisions that were introduced by the Finance Act of 2021 was the amendment of section 52 (2)(b) of the Stamp Duty Act. The amendment had the effect of waiving payment of stamp duty in any conveyance or transfer operating as a voluntary disposition, if the conveyance or transfer is in favor of any body of persons established or a registered family trust for charitable purposes only, or the trustees of a trust so established. The full text of the said section is as follows;

52. Duty of gifts inter vivos.

(1) Any conveyance or transfer operating as a voluntary disposition inter vivos shall be chargeable with stamp duty as if it were a conveyance or transfer on sale, with the substitution in each case of the value of the property conveyed or transferred for the amount or value of the consideration for the sale.

(2) Notwithstanding the provisions of subsection (1), a conveyance or transfer, or an agreement for a conveyance or transfer, operating as a voluntary disposition of property shall not be chargeable with any duty, if the conveyance or transfer is in favor of—

(a)any body of persons incorporated by special Act and that body is by its Act precluded from dividing any profit amongst its members and the property conveyed is to be held for the purposes of an open space or for the purposes of its preservation for the benefit of Kenya; or

(b)any body of persons established or a registered family trust for charitable purposes only or the trustees of a trust so established.

Similarly, the Finance Act of 2021 amended paragraph 36(g) of the First Schedule of the Income Tax Act to introduce a provision, waiving payment of capital gains tax on income derived by an individual upon transfer of property, including investment shares, which is transferred or sold for the purpose of transferring the title or the proceeds into a registered family trust. Additionally, paragraph 58 of the same schedule expressly states that any capital gains relating to the transfer of title of immovable property to a family trust shall be exempted from tax.