Nairobi — President William Ruto has signed the VAT (Amendment) Act 2026 into law, temporarily reducing the Value Added Tax on fuel from 16 percent to 8 percent for a period of 90 days. The measure is intended to ease pressure on consumers and stabilise fuel prices in Kenya.
The tax cut is expected to provide short-term relief to motorists, transport operators, and businesses heavily reliant on petroleum products. Fuel prices have remained a major concern for households and the transport sector, with fluctuations in global oil markets continuing to impact local pump prices.
According to the amendment, the 50 percent reduction in VAT is a temporary fiscal intervention while the government reviews broader measures to cushion Kenyans from external shocks affecting energy costs.
While signing the Bill into law, President Ruto reiterated the government’s commitment to stabilising fuel prices through a mix of tax adjustments, subsidies, and procurement reforms in the petroleum sector.
The 90-day window is expected to allow policymakers time to assess global oil trends and determine whether further adjustments will be necessary once the period lapses. Stakeholders in the transport and logistics sector are expected to welcome the move, which could translate into reduced operational costs and potentially lower commodity prices if sustained across supply chains.
However, economists are likely to closely watch the fiscal implications of the tax cut, particularly its impact on government revenue and budgetary allocations in the short term.
The VAT amendment marks one of the most significant recent interventions in Kenya’s fuel pricing framework as the government seeks to balance affordability for consumers with long-term fiscal stability.
