President William Ruto has assented to a law that halves Value Added Tax (VAT) on petroleum products from 16% to 8% to ease pressure on households and businesses.
- •Ruto said the measure was part of an urgent government response to economic shocks triggered by the ongoing conflict in the Middle East, which has driven up fuel costs globally.
- •The Value Added Tax (Amendment) Bill, 2026, formalises the tax cut that will initially run for 90 days, with room for extension depending on global oil price trends.
- •The bill was tabled and passed by Parliament on Thursday afternoon.
“We have taken this urgent and necessary step because a surge in the cost of fuel has a ripple effect on consumer goods and services,” Ruto said.
Deputy Majority Leader Owen Baya told the House that the move was necessitated by external shocks beyond Kenya’s control. “Kenya exists within the global financial ecosystem, and disruptions in the Middle East have greatly affected our country,” he said, noting that existing legal provisions had been exhausted.
Immediate Relief at the Pump
The tax cut has already triggered a downward adjustment in fuel prices after the Energy and Petroleum Regulatory Authority (EPRA) recalculated pump prices barely a day after announcing record highs.
In Nairobi, super petrol dropped by KSh 9.37 to KSh 197.60 per litre, while diesel fell by KSh 10.21 to KSh 196.63. Kerosene remained unchanged at KSh 152.78. In Mombasa, super petrol now retails at KSh 194.32 and diesel at KSh 193.35.
The revision pulls pump prices in the capital back below the KSh 200 mark, partially reversing earlier increases that had sparked public concern.
While backing the Bill, lawmakers signalled that deeper reforms may be needed to address persistently high fuel costs.
Kitui Central MP Makali Mulu urged the government to review additional levies embedded in fuel pricing. “We must also look at other taxes because we source fuel from the same markets as our neighbours, yet prices differ due to taxation,” he said.
Central Imenti MP Moses Kirima called for accelerated development of Kenya’s own petroleum resources, arguing that local production could shield the country from external shocks.
At the same time, Kabuchai MP Majimbo Kalasinga warned transport operators against retaining high fares despite falling fuel costs, insisting that savings must be passed on to consumers.
Questions were also raised over the efficiency of the government-to-government (G-to-G) fuel import framework, with Suba South MP Caroli Omondi cautioning that market concentration could dilute the intended benefits of the tax cut.
