Kenya National Assembly extends 8% VAT on petroleum products for 3 more months

• The National Assembly passed the Tax Laws (Amendment) Bill 2026, which targets fuel taxation and construction costs
• Majority Leader Kimani Ichung'wah moved the Bill, citing ongoing Middle East tensions as the key driver behind the proposed extension
• Finance Committee chair Kimani Kuria revealed the government had already foregone approximately KSh 54 billion in revenue over six months to protect consumers

Nairobi - The National Assembly has passed the Tax Laws (Amendment) Bill (National Assembly Bill No. 65 of 2026), a move that will keep the Value Added Tax on petroleum products at 8% rather than allowing it to revert to the standard 16% rate.

Leader of the Majority in the House Kimani Ichung'wah sponsored the bill, which amends the Value Added Tax Act and the Excise Duty Act.

He told the House the reduced fuel VAT rate would remain in place for a further 90 days, with National Treasury Cabinet Secretary John Mbadi being granted the authority to extend the relief by an additional three months if Middle East tensions persist.

"We need to amend the VAT Act to extend the reduced rate for another 90 days, in the hope that the war in the Middle East will come to an end. If it does not, we are also allowing the Cabinet Secretary the latitude to extend the period for a further three months. This guarantees Kenyans continued access to the lower VAT rate of eight per cent on fuel for up to six months," Ichung'wah said.

Ichung'wah, who is also the Kikuyu MP, expressed optimism that Kenya could eventually reduce its exposure to global oil price shocks through oil exploration activities in Lokichar, Turkana County, and the planned Dangote oil refinery in Lamu County.

Ceramic Tiles Excise Duty Reform

The bill also introduces a significant change to how excise duty is calculated on ceramic tiles, shifting the basis from weight to surface area.

Under the current framework, importers pay either 5% of the excisable value or KSh 50 per kilogramme, whichever applies.

Ichung'wah noted that a single container carrying roughly 25,000 kilogrammes of tiles could attract excise duty of approximately KSh 1.25 million, sometimes exceeding the value of the goods themselves.

The amendment would base taxation on measurable surface area in square metres, which Ichung'wah said could reduce the tax liability on a typical consignment from a range of KSh 1.2 million to KSh 1.5 million down to approximately KSh 420,000 to KSh 600,000. The changes extend to other ceramic products and bathroom ware.

Lawmakers Back the Bill

Molo MP Kimani Kuria, who also chairs the Finance and National Planning Committee, seconded the bill, warning that rising fuel prices were creating pressure across the economy.

"Geopolitical tensions in the Middle East, which continue to exert pressure on global oil prices, led the Committee to deem it necessary to cushion Kenyans against rising fuel costs and their cascading effects on transportation, production costs and the general cost of living," Kuria said.

Suba South MP Caroli Omondi supported the Bill while urging the government to pursue a government-to-government framework for fuel importation, arguing that removing intermediaries from the supply chain would further lower prices at the pump.

New EPRA Prices Take Effect October 15

Earlier, the Energy and Petroleum Regulatory Authority (EPRA) announced new maximum retail prices for the October 15 to November 14 cycle.

In Nairobi, super petrol will retail at KSh 226.96, a rise of KSh 12.93 per litre from the previous cycle's KSh 214.03.

Diesel will cost KSh 227.76, up by KSh 9.90, while kerosene jumps sharply to KSh 219.85, an increase of KSh 28.49 per litre.

EPRA attributed the increases to rising international petroleum prices driven by Middle East disruptions, which have pushed up shipping, insurance and fuel procurement costs.

Source: TUKO.co.ke