Members of Parliament in Kenya have passed the Value Added Tax (Amendment) Bill, 2026, proposing a temporary reduction of VAT on petroleum products.
VAT on Fuel Reduced to 8%
The Bill seeks to amend Section 5 of the VAT Act by lowering the tax rate on petrol, diesel, and kerosene to 8 percent, effective April 15, 2026.
The move is expected to provide relief to consumers grappling with rising fuel costs and the high cost of living.
Relief for Motorists and Businesses
The reduction in VAT is likely to ease pressure on motorists and businesses, particularly in the transport and manufacturing sectors, which heavily rely on fuel.
Lower fuel costs could also help stabilise prices of goods and services across the economy.
Comes Amid Rising Fuel Prices
The development comes shortly after the Energy and Petroleum Regulatory Authority (EPRA) announced an increase in pump prices, driven by rising global oil prices and exchange rate fluctuations.
The VAT adjustment is seen as part of broader government efforts to cushion consumers from the impact of global market volatility.
Temporary Measure
Lawmakers indicated that the tax reduction is temporary, aimed at addressing immediate economic pressures while longer-term solutions are explored.
Awaiting Implementation
The Bill now awaits further legislative processes, including presidential assent, before full implementation.
If enacted, the lower VAT rate could play a key role in moderating fuel prices in the coming weeks.
