Kenyans could continue benefiting from reduced Value Added Tax (VAT) on petroleum products after the National Assembly passed a Bill seeking to maintain the rate at 8 per cent for another three months, following a sharp increase in fuel prices.
The Tax Laws (Amendment) Bill, 2026, sponsored by Majority Leader Kimani Ichung’wah, seeks to retain the reduced rate on petrol, diesel and kerosene instead of reverting to the standard VAT rate of 16 per cent.
The proposed extension comes as motorists and households face higher fuel costs after the Energy and Petroleum Regulatory Authority (EPRA) raised pump prices by Ksh12.93 per litre for petrol, Ksh9.90 for diesel and Ksh28.49 for kerosene in its latest review.
Under the new prices, super petrol retails at Ksh226.96 per litre in Nairobi, while diesel costs Ksh227.76 and kerosene Ksh219.87. In Mombasa, petrol sells at Ksh223.81, diesel at Ksh224.61 and kerosene at Ksh216.71.
A man fueling a car at a petrol station
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New Vision
Moving the Bill on Wednesday, October 14, Ichung’wah said the extension would provide another 90 days of relief, with the Treasury CS allowed to extend the period by a further three months if the conflict in the Middle East persists.
“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,” Ichung’wah said, adding that the proposed provision would allow the relief to continue for up to six months.
The latest fuel price increases have been attributed to pressure on international oil prices and developments in the U.S. -Israel war on Iran and the government's decision not to extend the fuel price stabilisation measures for the latest pricing cycle.
EPRA DG Edward Mwirigi said the authority had opted against using the available stabilisation funds, explaining that the money could be reserved to cushion consumers in future pricing cycles if international prices rose further.
“September has been the worst month ever since this war broke out. Super petrol has reached USD1,300 per metric tonne from the initial USD600 per metric tonne,” Kinyua told journalists on Wednesday, October 14.
Finance Committee Chairperson Kimani Kuria supported the extension, saying geopolitical tensions in the Middle East had continued to put pressure on global oil prices, with higher fuel costs affecting transport, production and the general cost of living.
Kuria said the government had forgone approximately Ksh54 billion in revenue over the preceding six months through the fuel tax relief measures.
If enacted, the Bill would maintain the reduced VAT rate beyond the current relief period, although the final impact on pump prices would also depend on international oil prices, exchange rates and other components used in EPRA's monthly calculations.
EPRA Director General Eng. Edward Kinyua speaking at a past media roundtable.
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TalkAfrica