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President William Ruto has signed two tax laws introducing changes to fuel taxation, construction materials and revenue administration. The legislation maintains reduced VAT on petroleum products while adjusting taxes on selected building materials.
Ruto assented to the Value-Added Tax Amendment Bill and the Kenya Revenue Authority (Amendment) Bill at Eldoret State Lodge on Friday, October 16, 2026. The changes address household fuel costs, construction expenses and coordination between government agencies responsible for collecting revenue.
Reduced Fuel VAT Extended for 90 Days
The Value-Added Tax Amendment law maintains the eight per cent VAT rate on petrol, diesel and paraffin for an initial 90 days. The government may extend the arrangement for another 90 days if the situation in the Middle East fails to improve.
The measure aims to shield households and businesses from additional fuel costs arising from international oil market disruptions. Government officials said maintaining the reduced rate would help prevent further tax pressure from reaching consumers.
Josephat Nanok, the Deputy Chief of Staff, explained the legislation during a briefing to the President. He said the measure would cushion the Kenyan economy against the effects of the ongoing Middle East crisis.
Nanok also noted that the Energy and Petroleum Regulatory Authority (EPRA) considered the reduced VAT rate when announcing fuel prices. He said prices would have been higher if EPRA had not included the eight per cent rate in its calculations.
According to the briefing, the law took effect at midnight on October 14, 2026, following advice from the Attorney-General. The arrangement therefore covers fuel taxation while the government monitors developments affecting international petroleum markets.
New Tax Rates for Selected Construction Materials
The VAT legislation also changes how authorities calculate taxes on certain construction materials. These adjustments affect construction tiles, ceramic fittings and imported float glass.
Under the new provisions, the tax applicable to construction tiles will use a rate of Ksh400 per square metre. This replaces the previous measurement based on weight.
The law also reduces the tax on ceramic fittings, including sinks, from Ksh50 to Ksh30 per kilogramme. The changes could influence costs for builders and developers, although final retail prices will depend on other market factors.
The legislation also addresses imported float glass from East African countries. The government says these measures aim to support local industry, construction activity and affordable housing.
KRA Law Changes Board Membership
The second law introduces changes to the composition of the Kenya Revenue Authority board. It provides for the managing director of the Kenya Ports Authority (KPA) to join the board.
The amendment seeks to strengthen coordination between customs operations at the port and domestic revenue collection. Nanok said the arrangement would help align decisions made by KRA with operations at KPA.
The legislation also provides for the Attorney-General, the Principal Secretary for the National Treasury and the KRA Commissioner-General to serve as substantive board members. These changes aim to improve coordination and decision-making across government institutions.
Nanok told the President that the Cabinet initiated the bill before Parliament considered it as a money bill. He cited Article 114 of the Constitution in explaining the legislative process.
What the New Laws Mean for Kenyans
Maintaining reduced fuel VAT could help limit the tax component of petrol, diesel and paraffin prices during the initial period. However, international oil prices, exchange rates and transport expenses will continue influencing the prices consumers pay.
Builders and property developers may also benefit from the revised taxes on selected construction materials. Whether consumers experience lower building costs will depend on how suppliers and retailers reflect the changes in market prices.
The KRA amendments focus on institutional coordination rather than directly changing household tax rates. Their impact will depend on implementation and whether stronger cooperation improves revenue collection and administration.
The two laws therefore address different aspects of Kenya’s economy. One targets fuel and construction-related taxation, while the other seeks to improve coordination between key government revenue institutions.
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