Subscribe to our Newsletter to receive the latest updates on our content. By tapping the “Subscribe” button you will be redirected to subscription page. Subscription is free.
On 14 April 2026, the Cabinet Secretary for the National Treasury announced a temporary reduction of the VAT rate on selected petroleum products in Kenya, from the standard 16% to 8%, effective 15 April 2026 for a period of 90 days. The measure targets three specific products, namely, motor spirit (gasoline) premium, illuminating kerosene, and gas oil (automotive, light, amber for high-speed engines), identified by their Harmonised System (HS) tariff codes.
17 April 26
Other Insights:
The reduction was initially effected through two Legal Notices issued on 14 April 2026, with the first reducing the rate to 13% and the second further reducing it to 8%. However, the 8% reduction appeared to exceed the Cabinet Secretary’s delegated authority under section 6(1) of the VAT Act, which permits a maximum variance of 25% (or 4 percentage points) from the standard rate. To regularise this position, the Value Added Tax (Amendment) Bill, 2026 was tabled before the National Assembly on 16 April 2026, passed through all readings, and was assented to by the President on 17 April 2026, with retrospective effect from 15 April 2026.
The intervention forms part of the Government’s broader effort to cushion consumers against rising fuel costs, supported by a drawdown of approximately KES 6.2 billion from the Petroleum Development Levy Fund. Notably, the reduced rate does not extend to several other petroleum products, including regular gasoline, aviation spirit, jet fuel, diesel oil for industrial use, and residual fuel oils.
This legal alert sets out the full legal analysis and practical implications.
Click here to download and read the full article.
Should you have any questions regarding this legal alert, please do not hesitate to contact Daniel Ngumy, Kenneth Njuguna or Dennis Chiruba.
_____________________
Contributors
1. Cindy Mochere – Principal Associate
2. Collins Owino – Trainee Lawyer