The government has extended the reduced 8 per cent Value Added Tax (VAT) on petrol and diesel for another three months, allowing the tax relief to remain in force until October 14, 2026, ahead of the latest monthly fuel price review.
Energy and Petroleum Cabinet Secretary Opiyo Wandayi said the extension was approved in consultation with the National Treasury as part of measures to cushion consumers from global oil market volatility while guaranteeing uninterrupted fuel supplies.
He said the move reflects the government’s commitment to protecting households, businesses and the wider economy from external shocks while keeping fuel prices as affordable as possible.
Government allocates KSh945 million subsidy
In addition to extending the lower VAT rate, the government will draw KSh945 million from the Petroleum Development Levy (PDL) Fund to cushion consumers during the July–August fuel pricing cycle.
The subsidy will help moderate pump prices that are expected to be announced by the Energy and Petroleum Regulatory Authority (EPRA) later on Tuesday.
Government assures Kenyans of adequate fuel supply
The announcement comes amid renewed concerns over global oil supplies following heightened tensions involving Iran and the United States and disruptions around the Strait of Hormuz.
Despite the uncertainty, Wandayi assured motorists, transport operators, manufacturers, farmers and businesses that Kenya has sufficient fuel stocks under the Government-to-Government import arrangement.
He maintained that the country continues to enjoy stable fuel supplies and that the government remains committed to ensuring the situation is sustained.
Fuel tax was reduced in April
The current 8 per cent VAT rate was introduced in April after the government reduced the tax from 16 per cent to ease the cost of living and shield consumers from rising international fuel prices.
The latest extension means motorists will continue benefiting from the reduced tax rate for another three months.
