Ruto signs fuel VAT extension as motorists react to EPRA’s latest price review

NAIROBI, Kenya, Oct 16 — President William Ruto has signed two tax laws overhauling the financing and governance of the Kenya Revenue Authority (KRA), changing the taxation of construction materials and allowing the extension of the reduced 8 per cent VAT rate on petroleum products for a further 90 days. The Tax Laws (Amendment) Act, 2026, extends the reduced Value Added Tax (VAT) rate on petroleum products from 16 per cent to 8 per cent for another 90 days, while introducing changes to the taxation of selected construction materials. The Kenya Revenue Authority (Amendment) Act, 2026, changes the composition of KRA’s board and establishes a funding framework tied to projected revenue and collections above quarterly targets.

The measures are intended to cushion consumers against high fuel prices, ease construction costs and improve revenue collection without introducing additional taxes. However, their practical impact will depend on how the provisions are implemented and whether the intended benefits reach consumers and businesses. What does the fuel VAT extension mean?

The new law maintains VAT on petrol, diesel and kerosene at 8 per cent, down from the standard 16 per cent, for an initial 90 days. The Cabinet Secretary for the National Treasury may extend the reduced rate for a further 90 days if necessary. The extension follows the expiry on October 14 of an earlier 180-day relief measure introduced in April to cushion consumers against rising international petroleum prices.

According to the briefing accompanying the signing, the new measure takes effect from midnight on October 14, 2026. This provision is significant because the Energy and Petroleum Regulatory Authority (EPRA) had already incorporated the 8 per cent VAT rate into its latest fuel-price review, announced on October 14 and effective from October 15. EPRA’s latest review raised Nairobi’s maximum retail prices to: Super petrol: Sh226.96 per litre, an increase of Sh12.93.

Diesel: Sh227.76 per litre, an increase of Sh9.90. Kerosene: Sh219.87 per litre, an increase of Sh28.49. The regulator attributed the increases to higher landed costs of imported refined petroleum products.

The VAT reduction limits the tax component of fuel prices compared with what would apply at the standard rate, but it does not eliminate increases arising from international oil … NAIROBI, Kenya, Oct 16 — President William Ruto has signed into law an extension of the reduced 8 per cent Value Added Tax (VAT) on petroleum products, days after the Energy and Petroleum Regulatory Authority (EPRA) applied the same rate in its latest fuel-price review. The Tax Laws (Amendment) Act, 2026, empowers Treasury Cabinet Secretary to extend the reduced VAT rate for a further 90-day extension.