Good News for Kenyans as Parliament Moves to Extend Reduced Fuel VAT

Kenyans could receive additional tax relief on petrol, diesel and kerosene after the National Assembly passed a Bill seeking to extend the reduced Value Added Tax (VAT) rate of 8 per cent for another 90 days.

The development comes at a time when motorists and households are grappling with a sharp rise in fuel prices announced by the Energy and Petroleum Regulatory Authority (EPRA) on Wednesday, October 14.

The Tax Laws (Amendment) Bill, 2026, sponsored by National Assembly Majority Leader Kimani Ichung’wah, seeks to retain the lower VAT rate on petroleum products instead of allowing it to revert to the standard rate of 16 per cent.

If the proposed extension becomes law, Kenyans could continue benefiting from the reduced tax rate beyond the existing relief period.

While moving the Bill on Wednesday, October 14, Ichung’wah said the extension was intended to provide relief as international oil prices remain under pressure due to the conflict in the Middle East.

He explained that the proposal would maintain the reduced rate for another three months, with an option for the Treasury Cabinet Secretary to extend the period by a further three months if the conflict persists.

The proposed tax relief comes as EPRA announced new pump prices that took effect for the October 15 to November 14 pricing cycle.

In Nairobi, Super Petrol now retails at KSh226.96 per litre, while diesel costs KSh227.76 and kerosene KSh219.87.

The latest review raised petrol prices by KSh12.93 per litre, diesel by KSh9.90 and kerosene by KSh28.49.

EPRA Director General Edward Mwirigi Kinyua attributed the increases partly to rising international petroleum costs and developments surrounding the conflict involving the United States, Israel and Iran.

The authority also opted not to use available fuel price stabilisation funds during the latest pricing cycle, with Kinyua indicating that the money could be preserved to cushion consumers in future months if prices rise further.

Finance Committee Chairperson Kimani Kuria backed the proposed VAT extension, pointing to the effect of international tensions on fuel costs, transport, production and the general cost of living.

Kuria also said the government had forgone approximately KSh54 billion in revenue over the preceding six months through fuel tax relief measures.

However, the proposed extension does not automatically mean that pump prices will fall. The VAT rate is only one component of fuel pricing, and future retail prices will also depend on international oil costs, exchange rates and other factors considered in EPRA’s monthly reviews.

For now, motorists and households will be watching the next legislative steps to establish whether the proposed extension will become law and how long the reduced VAT rate will remain in place.

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