President William Ruto has signed the VAT (Amendment) Act 2026 into law, reducing the Value Added Tax on fuel from 16 percent to 8 percent for a period of 90 days effective immediately. The measure, announced by the President’s Office on Tuesday, is intended to alleviate the rising cost of living and stabilize fuel prices amid persistent pressure on household budgets. The temporary tax reduction applies to all petroleum products, including petrol, diesel, and kerosene, and will remain in force until the finish of the 90-day period, after which the standard 16 percent VAT rate will resume unless further legislative action is taken. The Kenya Revenue Authority confirmed it has issued operational directives to fuel distributors and retailers to implement the revised tax rate at the pump, with compliance monitoring underway. Officials stated that the adjustment is expected to lower pump prices by approximately KSh 10 to KSh 15 per litre, depending on product and regional pricing structures. The amendment follows sustained public debate over the impact of fuel taxation on transportation costs and inflation, particularly in urban centers like Nairobi and Mombasa. Consumer advocacy groups had urged the government to consider targeted relief measures, citing fuel’s disproportionate effect on low- and middle-income households. The Treasury has not yet released an official estimate of the fiscal cost of the temporary tax reduction, nor has it indicated whether compensatory revenue measures are under consideration. Parliament’s Finance and National Planning Committee is scheduled to review the amendment’s economic impact in a session set for next week. No official statement has been issued by the Office of the President regarding potential extensions of the measure beyond the initial 90-day window. The Kenya Association of Manufacturers and the Kenya Private Sector Alliance have been contacted for comment but had not responded at the time of publication.
