Fuel VAT Halved: Ruto Signs Tax Laws Cutting Petroleum Levy to 8% for 90 DaysFuel VAT Halved: Ruto Signs Tax Laws Cutting Petroleum Levy to 8% for 90 Days
Key Highlights
- Ruto signed two tax bills on 16 October that cut value added tax on petroleum products from 16% to 8% for a further 90 days.
- The cut follows the Energy and Petroleum Regulatory Authority's 15 October increase, which lifted the Nairobi petrol ceiling to KSh 226.96 ($1.75) a litre from KSh 214.03 ($1.65).
- The bills also revise excise duty on tiles, sanitary ware and glass products to lower construction costs, while President Ruto says the Kenya Revenue Authority changes will not raise taxes.
President William Ruto has signed into law two tax bills that cut value added tax on petroleum products from 16% to 8% for a further 90 days, a move aimed at cushioning motorists and transporters from a fresh fuel price rise.
The decision matters because the Energy and Petroleum Regulatory Authority (EPRA) lifted pump price ceilings on 15 October, and fuel costs feed directly into the price of moving food and goods. Mwenendo does not yet have EPRA's calculation of how far the lower VAT rate will reduce the pump ceilings.
What the two bills change
The president signed the Tax Laws (Amendment) Bill, 2026 and the Kenya Revenue Authority (Amendment) Bill, 2026 on 16 October, according to Business Today Kenya. The petroleum VAT cut applies for a further 90 days, so it is temporary unless it is extended.
The Tax Laws (Amendment) Bill also revises excise duty on tiles, sanitary ware and glass products. The stated aims are lower construction costs, a stronger housing sector and more jobs.
Mr Ruto said on X that the Kenya Revenue Authority (KRA) amendment strengthens the authority's governance and financing and improves efficiency and revenue collection without raising taxes. The report does not say what the amendment changes in detail.
Why the cut follows a price rise
As Mwenendo earlier reported, petrol costs KSh 12.93 more a litre from 15 October. The Nairobi petrol ceiling rose to KSh 226.96 ($1.75) a litre from KSh 214.03 ($1.65), diesel rose KSh 9.90 to KSh 227.76 ($1.75), and kerosene rose KSh 28.49 to KSh 219.87 ($1.69). EPRA said September import costs for petrol and diesel climbed by more than 11%, driven by Middle East tensions.
Mwenendo earlier reported on how transport prices rose 15.6% on the year in September, when annual inflation reached 6.8%. Transport was the fastest-rising major division, and food and transport together contributed 4.4 percentage points of the headline rate.
The ceilings also differ by town. As Mwenendo earlier reported, petrol costs more in Mandera than Mombasa, with EPRA's maximum petrol price running from KSh 223.80 ($1.73) a litre in Mombasa to KSh 240.96 ($1.86) in Mandera for 15 October to 14 November.
Why the 90-day limit matters
Pump prices are set by EPRA, not by the tax bills themselves, so the reduction will reach motorists only when the regulator publishes revised ceilings or applies the lower rate. Readers should check EPRA's published maximum prices rather than assume an immediate fall at the pump.
The 90-day limit also means the relief has an end date. If the rate returns to 16% without a matching fall in import costs, pump prices could rise again, although that outcome depends on future decisions that have not been announced.
In Summary
- Who signed the bills?
- President William Ruto signed the Tax Laws (Amendment) Bill, 2026 and the Kenya Revenue Authority (Amendment) Bill, 2026.
- What changes for fuel?
- VAT on petroleum products falls from 16% to 8% for a further 90 days.
- When was it signed?
- On 16 October 2026, a day after EPRA raised pump price ceilings.
- Where does it apply?
- Across Kenya, wherever petroleum products are sold.
- Why was the cut made?
- The government says it aims to ease the high cost of living after the fuel price rise.
- How will motorists feel it?
- Pump prices are set by EPRA, so the effect depends on revised ceilings, which are not yet published.