MPs extend fuel VAT relief for 90 days as Kenyans face rising costs

The National Assembly has approved a Bill to maintain reduced VAT on petroleum products for another 90 days, providing relief for Kenyan households and businesses amid rising fuel costs. Sponsored by National Assembly Majority Leader Kimani Ichung’wah, the Tax Laws (Amendment) Bill, 2026 seeks to keep VAT on petrol, diesel, and kerosene at eight per cent, down from the standard 16 per cent rate.

Treasury Cabinet Secretary could extend the relief for up to three more months if the conflict in the Middle East persists. The extension aims to alleviate the tax burden on essential goods and services, such as public transport, food distribution, and manufacturing, which are all influenced by fuel prices. Finance and National Planning Committee Chairperson Kimani Kuria emphasized the need for government intervention due to geopolitical tensions impacting global oil prices.

However, the final prices paid by consumers still depend on international oil prices and other applicable costs and taxes. The Bill also proposes changes to the Excise Duty Act, shifting the basis for calculating excise duty on ceramic tiles from weight to surface area. This adjustment could reduce the tax burden on a typical consignment by up to 70%, benefiting both importers and consumers.