The Lower Eastern Times Opening The Third Eye
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William Ruto has signed into law the Value Added Tax (VAT) Amendment Bill 2026 at State House in Nairobi, paving the way for a temporary reduction of VAT on petroleum products from 16% to 8% for a period of three months.
The decision follows the passage of the Bill by the National Assembly during a special sitting on April 16, where legislators supported it as an urgent measure to cushion Kenyans from the rising cost of living driven by global oil price increases.
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While presenting the Bill, Deputy Majority Leader Owen Baya linked the surge in fuel prices to external factors, particularly geopolitical tensions in the Middle East that have disrupted global supply chains.
He explained that Kenya’s position in the global economy makes it vulnerable to international shocks, noting that the rising fuel costs are largely influenced by global market dynamics rather than local policies.
Baya pointed out that the country’s reliance on imported refined petroleum products makes pump prices highly sensitive to changes in global oil prices and currency exchange rates.
He added that between February and March 2026, the cost of importing fuel rose significantly, especially for diesel and kerosene, reinforcing the impact of international pricing on the local market.
According to him, the high cost of fuel has triggered a chain reaction across the economy, pushing up the prices of transport, food, and other essential commodities.
The VAT reduction is expected to ease this burden by lowering the cost of fuel imports, with anticipated benefits across key sectors such as transport, manufacturing, and agriculture, which heavily depend on energy.
