MPs pass VAT Amendment Bill 2026, slashing fuel tax to 8%

Parliament on Thursday passed an emergency Value Added Tax Amendment Bill 2026, which seeks to regularize the slashing of VAT on fuel from 16% to 8%.

The move, which seeks to cushion Kenyans against rising fuel prices, will once assented to by President also regularises the price reduction effected on Wednesday night by the Electricity and Petroleum Regulatory Authority (EPRA), which saw the price of petrol lowered by Ksh.9 and diesel by Ksh.10.

The bill, which was introduced and passed in record 1 hour on Thursday afternoon in the National Assembly, came only hours after President William Ruto announced a 50% reduction on Value Added Tax (VAT) on fuel, to cushion Kenyans from the shockwaves of the historic hike in fuel prices.

The MPs gave a nod to the Value Added Tax Amendment Bill of 2026, which effectively reduces the VAT on fuel from 16% to 8% for the next 3 months.

Should the President assent to the bill, the new pump prices announced by EPRA will be regularised.

National Assembly Deputy Majority Leader Owen Baya said: “We’re not just reducing fuel…we are saving our economy.”

Molo MP Kimani Kuria, the Chairperson of the Finance committee, stated: “Tumewezesha Waziri kupunguza VAT kwa 25% kwa hivyo…Waziri hangepunguza zaidi ya hapo.”

As it stands, the Cabinet Secretary for Treasury only has a leeway to adjust VAT by 25%, which informed the initial reduction of up to 13% when the new prices were announced first on Tuesday night.

The legislators on the government side, lauded the government saying it had listened to the cry of Kenyans.

“Kuna wengine wanataka mafuta ipunguzwe lakini ikifika wakati wa kupitisha mswada hawajitokezi. Wako huko kwa mazishi wakipiga kelele. Majina pia yachapishwe ya wale walipunguza ushuru huo vile walichapisha tulipopandisha,” added MP Kimani.

However, those in the opposition benches, termed the interventions as too little too late and an effort to hoodwink Kenyans, yet the prices still remained high.

Suba South MP Caroli Omondi said: “There’s something called the fixed premium which fluctuates from month-to-month and that’s why the cost of fuel in Uganda and Tanzania is cheaper than in Kenya. In Kenya it has been fixed at 110 dollars per tonne. When contracts were signed it was between 60-70. That needs to be changed.”

Tetu MP Geoffrey Wandeto said: “The G to-G is not working. It has been called Government to Gangster…”

Kitui Central  MO Makali Mulu added: “I have heard people asking why oil is expensive in Kenya more than Uganda and Tanzania, it is because of taxes.”

In its review of the Tuesday's prices, EPRA announced a downward adjustment in fuel prices in line with reduction in Value Added Tax (VAT).

A liter of super petrol and diesel decreased by Ksh.9.37 and Ksh.10.21 respectively, meaning the maximum retail price for super petrol now stands at Ksh.197.60 per litre, with diesel retailing at Ksh.196.63 and kerosene remaining unchanged.