MPs approve extension of 8% VAT on fuel for another 90 days

The National Assembly has approved an extension of the reduced Value Added Tax (VAT) on petroleum products, from 16% to 8%, for another 90 days. The Tax Laws Amendment Bill, introduced by Majority Leader Kimani Ichungw'a, aims to provide relief to consumers facing rising global oil prices. This extension, which was initially introduced in April, can be further extended by another three months at the discretion of the National Treasury Cabinet Secretary.

The final decision on the matter will be made once the current tension in the Middle East subsides. If it does not, the Cabinet Secretary will have the authority to legally extend the relief for an additional three months, after which the matter can be reviewed. The amendments, which have received bipartisan support, pass the third reading and will be implemented if approved, providing consumers with relief for the next six months.

The extension will apply to 8% VAT on super petrol, kerosene, and diesel. The Finance and National Planning Committee Chairman, Kimani Kuria, emphasized the need to address the pressure exerted on global oil prices by the geographical tensions in the Middle East. However, some lawmakers have cautioned the government about the continued importation of fuel under the government-to-government agreement, urging a return to the open tender system.