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Kenyans could continue paying reduced taxes on petroleum products after Parliament approved a proposal to retain the lower Value Added Tax (VAT) rate for another three months. The move comes amid rising fuel prices that have increased pressure on households, motorists and businesses.
The Tax Laws (Amendment) Bill, 2026, sponsored by National Assembly Majority Leader Kimani Ichung’wah, seeks to maintain VAT on petrol, diesel and kerosene at 8 per cent instead of the standard 16 per cent.
Under the proposal, the relief would run for another 90 days, with the Treasury Cabinet Secretary permitted to extend it for a further three months if tensions in the Middle East continue.
Ichung’wah said the extension was intended to cushion consumers as international oil prices remain under pressure from geopolitical developments.
The proposal follows the latest fuel price review by the Energy and Petroleum Regulatory Authority (EPRA), which increased petrol prices by KSh12.93 per litre, diesel by KSh9.90 and kerosene by KSh28.49.
In Nairobi, super petrol now retails at KSh226.96 per litre, 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.
Middle East Conflict Adds Pressure
The higher prices have been linked to international oil market pressures and the conflict involving the United States, Israel and Iran. EPRA Director General Edward Mwirigi said available fuel stabilisation funds had not been used in the latest pricing cycle, with the money potentially being reserved to protect consumers against future increases.
Finance Committee Chairperson Kimani Kuria backed the proposed extension, noting that rising fuel costs affect transport, production and the overall cost of living. He also said the government had forgone approximately KSh54 billion in revenue over the previous six months through fuel tax relief measures.
If the Bill becomes law, the reduced VAT rate would remain in place beyond the current relief period. However, the final pump prices would still depend on international petroleum costs, exchange rates and other factors considered in EPRA’s monthly reviews.
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