Govt Extends 8.0% VAT Rate on Fuel Ahead of EPRA Review

The government has extended the 8 percent Value Added Tax (VAT) rate on petroleum products for another three months, until October 14, 2026, to cushion motorists and businesses from rising global oil prices.

In a statement on  July 14, the Ministry of Energy and Petroleum also announced that it will deploy KSh945 million from the Petroleum Development Levy (PDL) to support the July-August 2026 fuel pricing cycle and help maintain current pump prices.

“In addition, as part of the Government’s commitment to cushioning households and businesses from international market volatility, in consultation with the National Treasury, we have extended the application period for 8% of Value Added Tax (VAT) on petroleum products for a further three months, until 14th October 2026. Further, in the July-August 2026 pricing cycle, the Government will deploy a subsidy from the Petroleum Development Levy to the tune of Kshs. 945 Million to sustain the current price levels,” stated the ministry.

Government Extends 8% Fuel VAT as It Assures Kenyans of Stable Fuel Supply

The ministry said the extension of the reduced VAT rate, together with the fuel price stabilization subsidy, is intended to shield consumers from volatility in the international oil market while ensuring petroleum products remain affordable.

Also Read: Salaried Kenyans Squeezed Hard as PAYE and VAT Push KRA Collections to KSh2.8 Trillion

The ministry assured Kenyans that despite heightened tensions in the Middle East and recent movements in global crude oil prices, the country’s fuel supply remains stable.

According to the statement, international benchmark prices have started to ease following a recent spike, with the government continuing to work with the industry to secure consistent and uninterrupted fuel supplies under the Government-to-Government (G-to-G) fuel import arrangement.

It added that fuel remains readily available across the country, supported by adequate national stocks, resilient fuel distribution networks and the continued success of the G-to-G procurement framework, which has helped reduce pressure on foreign exchange demand while improving predictability in petroleum supply.

KSh945 Million Set Aside to Stabilize Pump Prices

The ministry said the government remains committed to protecting consumers and businesses from sudden increases in fuel prices caused by global market fluctuations.

Also Read: EPRA Explains July 2026 Electricity Tariff Increase and New Charges

To achieve this, the government will maintain the reduced 8 percent VAT on petroleum products for a further three months beyond its scheduled expiry on July 14, 2026.

In addition, KSh945 million from the Petroleum Development Levy will be used during the July-August pricing cycle to sustain the current pump price levels.

The Ministry said the measures are intended to protect the economy from external shocks and help keep petroleum products affordable despite volatility in global markets.

Cabinet Secretary for Energy and Petroleum Opiyo Wandayi said the government has put in place systems and partnerships over the past few years that have strengthened Kenya’s ability to withstand international oil market volatility and maintain a reliable fuel supply.

He also assured motorists, public transport operators, manufacturers, farmers, businesses and consumers that the government remains committed to ensuring adequate fuel supply across the country.

Follow our WhatsApp Channel and X Account for real-time news updates.