The cost of fuel might hike by more than Sh 10 in July if Parliament passes the proposal by the government to revert to the previous 16% VAT rate on petroleum products.
According to the Finance Bill 2023 released last week, the government has doubled the rate from the operating 8%.
Currently, the VAT costs Sh13.28, Sh12, and Sh10.8 per litre of Petrol, diesel and kerosene respectively. With the new proposed VAT, the costs will shoot to an additional Sh26.6, Sh24, and Sh21.6 per litre.
“In any other case, 16 per cent of the taxable value of the taxable supply, the value of imported taxable goods or the value of a supply of imported taxable services,” read part of the Finance Bill 2023.
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The new move is to help improve revenue collection for the upcoming financial year and make up for the VAT exemption on cooking gas from July.
Under the Finance Bill, Liquefied petroleum gas (LPG), raw material for the manufacture of fertilizer, and improved tea for export will be exempted from value-added-tax (VAT) if Parliament approves proposals that are aimed at bolstering economic growth through President Ruto’s Bottom-up Economic Transformation Agenda (BETA).
