Ruto assents to VAT Amendment Bill 2026 at State House

President William Ruto has assented to the Value Added Tax (VAT) Amendment Bill 2026 at State House, Nairobi, clearing the way for the reduction of VAT on petroleum products from 16 per cent to 8 per cent for three months.

The move comes after the National Assembly passed the Value Added Tax (Amendment) Bill, 2026.

The Bill was approved during a special sitting on April 16, with lawmakers backing the measure as an emergency intervention to ease the cost of living amid global oil price shocks.

Moving the Bill, Deputy Majority Leader Owen Baya attributed the surge in fuel prices to external shocks, particularly geopolitical tensions in the Middle East that have disrupted global supply chains.

“Kenya exists within the global financial ecosystem, and therefore, the wars and disruptions that have been happening in the Middle East have greatly affected our country. What we have is not domestic policies that have driven up the cost of fuel, but rather international trade dynamics and geopolitics,” Baya said

He said the sharp rise in global oil prices, worsened by geopolitical tensions and conflicts in the Middle East, has significantly increased the cost of importing fuel into the country.

According to Baya, Kenya’s dependence on imported refined petroleum products makes local pump prices highly sensitive to international market trends and exchange rate fluctuations.

“Fuel prices in the current cycle are primarily driven by external economic factors rather than domestic policy decisions,” he said, adding that even slight changes in the exchange rate have a compounding effect on fuel costs due to the large volumes imported.

He told the House that the landed cost of petroleum products had risen sharply between February and March 2026, with diesel and kerosene recording significant increases.

“This clearly confirms that the primary driver of the current increase in fuel prices is the cost at which fuel is imported into the country,” Baya said.

The MP added that the high cost of fuel has a ripple effect across the economy, driving up the price of transport, food and other essential goods.

“Every Kenyan has felt the impact. From farm produce to cooking gas, the cost of living continues to rise,” he said.

The reduction of VAT is expected to directly lower the landed cost of fuel, with ripple effects across key sectors such as transport, manufacturing, and agriculture that are heavily dependent on energy.