National Assembly approves VAT reduction from 16 per cent to 8
By Mabonga Makhanu, April 16, 2026Members of the National Assembly have approved the Value Added Tax (Amendment) Bill, 2026, clearing the way for a reduction of VAT on petroleum products from 16 per cent to 8 per cent in a move aimed at cushioning Kenyans from persistently high fuel prices.
The bill, which was passed after debate in the House, amends the Value Added Tax Act and is expected to reduce pump prices, providing relief to households and businesses struggling with the high cost of living, driven partly by global oil market volatility.
While moving the bill, Deputy Majority Leader Owen Baya attributed the rise 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 added that existing legal provisions under the VAT Act had already been exhausted, making legislative intervention necessary.
“It is therefore necessary for this House to take additional steps to enact this legislation to cushion Kenyans,” he said.
The VAT reduction is expected to directly lower the landed cost of fuel, with ripple effects across key sectors such as transport, manufacturing, and agriculture, all of which heavily rely on energy.
MPs’ approval
Kitui Central MP Makali Mulu welcomed the proposal but urged the government to go further by reviewing other taxes and levies imposed on petroleum products.
“We need to pass this Bill as soon as possible to cushion Kenyans against high fuel prices… We should implore the government to look into other areas where we can reduce levies and taxes so that we make oil cheaper for Kenyans,” he said, noting price differences with neighbouring countries.
Central Imenti MP Moses Kirima called for accelerated development of the country’s own oil resources to reduce dependence on imports.
“If we had developed our own oil, we would not be facing what we are facing now,” he said.
Kabuchai MP Majimbo Kalasinga urged the transport sector to reflect the expected reduction in fuel costs. “If fuel prices have been reduced, they must also reduce fares instantly,” he said.
Caroli Omondi backs VAT
Suba South MP Hon. Caroli Omondi, while supporting the bill, also called for closer scrutiny of the government-to-government fuel import arrangement, arguing that market inefficiencies have undermined price stability.
With the VAT approved by the national assembly, fuel prices will de-escalate from Ksh206.60 to Ksh196.30 for petrol and diesel Ksh206.67 to Ksh196.67.