Nairobi — President William Ruto has signed the VAT (Amendment) Act 2026 into law, which temporarily reduces the Value Added Tax on fuel from 16 percent to 8 percent for a period of 90 days. This measure aims to alleviate pressure on consumers and stabilize fuel prices in Kenya. The tax cut is expected to provide short-term relief to motorists, transport operators, and businesses that heavily rely on petroleum products.
Fuel prices have been a significant concern for households and the transport sector, with fluctuations in global oil markets continuing to affect local pump prices. The amendment introduces a 50 percent reduction in VAT as a temporary fiscal intervention while the government reviews broader measures to protect Kenyans from external shocks impacting energy costs.
During the signing of the Bill into law, President Ruto emphasized the government’s commitment to stabilizing fuel prices through a combination of tax adjustments, subsidies, and procurement reforms in the petroleum sector. The 90-day period will allow policymakers to assess global oil trends and determine whether further adjustments are necessary once this timeframe concludes.
Stakeholders in the transport and logistics sector are likely to welcome this initiative, as it could lead to reduced operational costs and potentially lower commodity prices if sustained across supply chains. However, economists will closely monitor the fiscal implications of the tax cut, particularly its effect on government revenue and budgetary allocations in the short term. The VAT amendment represents one of the most significant recent interventions in Kenya’s fuel pricing framework, as the government seeks to balance consumer affordability with long-term fiscal stability.
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