Government extends 8% VAT on fuel for three more months

The government has extended the application of the reduced 8 percent Value Added Tax (VAT) on petroleum products for an additional three months in a move aimed at cushioning consumers from a possible rise in fuel prices.

Energy and Petroleum Cabinet Secretary Opiyo Wandayi said the decision was reached following consultations with the National Treasury, with the lower tax rate now set to remain in force until October 14.

Wandayi further announced that the government will inject Sh945 million from the Petroleum Development Levy during the July/August 2026 fuel pricing cycle to help maintain current pump prices.

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According to the Energy CS, the intervention is intended to shield households and businesses from volatility in global oil markets and ease pressure on the cost of living by preventing an increase in the prices of petrol, diesel and kerosene.

The extension of the reduced VAT regime and deployment of the subsidy form part of the government’s broader fuel stabilization measures aimed at protecting consumers while ensuring a steady supply of petroleum products across the country.

The latest announcement is expected to provide relief to motorists, transport operators and manufacturers who had feared higher fuel costs in the coming months.

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