Kenyan legislators adopted the Value Added Tax (Amendment) Bill 2026 on Thursday, slashing the tax on petroleum products from 16% to 8%.
This decisive move targets motor spirit, illuminating kerosene, and gas oil to shield citizens from a punishing cost of living. By fast-tracking the legislation, the National Assembly ensured immediate relief for a public grappling with volatile energy markets.
Immediate Impact at the Pump
The Energy and Petroleum Regulatory Authority (EPRA) revised retail prices downward for the April-May cycle. Under the new 8% tax regime, Nairobi motorists now pay Sh197.60 for super petrol and Sh196.63 for diesel. These figures represent a significant drop from the previous highs of Sh206.70 and Sh206.84 respectively. While petrol and diesel costs fell, kerosene remained stable at Sh152.78 per litre due to continued state subsidies.
Legislative Limits and Executive Action
While the Treasury Cabinet Secretary holds the power to adjust VAT administratively, Section 6(1) of the VAT Act restricts such changes to a 4% margin. Consequently, achieving the drop to 8% required a formal parliamentary amendment to bypass these legal ceilings.
President William Ruto spearheaded this initiative, directing the National Treasury to implement the cut for an initial 90 days. This period remains subject to a further 90-day extension depending on market stability.
“Kenyan legislators on Thursday adopted the Committee’s Report without amendments on The Value Added Tax (Amendment) Bill, 2026, aimed at reducing VAT on petroleum products… from 16% to 8%.”
Navigating Global Market Volatility
The tax reprieve arrives after a period of extreme price spikes driven by landed costs and exchange rate pressures. Earlier reviews saw petrol jump by Sh28.69 and diesel by Sh40.30, even after the government deployed Sh6.2 billion in price stabilization funds. By lowering the VAT floor to 8%, the state aims to counteract the weakening shilling and rising international crude prices more aggressively.
Regional Price Breakdown
The revised pricing structure provides modest relief across major Kenyan hubs. In Mombasa, super petrol now retails at Sh194.32, while diesel costs Sh193.35. These adjustments replace the steeper rates announced earlier in April, signaling a shift toward more robust fiscal interventions.
