Ruto Proposes Another Three Months of 8% Fuel VAT as Government Seeks to Extend Temporary Tax Relief

President William Ruto’s government has proposed extending the reduced eight per cent Value Added Tax (VAT) on petroleum products for another 90 days, giving motorists and other fuel consumers more time before the temporary tax relief expires.

The proposal is contained in the Tax Laws (Amendment) Bill, 2026, which seeks to extend the current arrangement for an additional three months. The measure would maintain the existing VAT rate on fuel during the proposed period if Parliament approves the legislation.

The move comes as the government seeks to maintain the temporary tax relief on petroleum products. Fuel prices remain an important concern for households, businesses and transport operators because changes in the cost of petroleum products can affect the prices of other goods and services.

Transport operators depend heavily on fuel, making its cost a major factor in their daily expenses. Businesses that rely on road transport may also face higher operating costs when fuel prices rise. These expenses can eventually affect the cost of transporting food, building materials and other essential goods.

For households, changes in fuel costs can influence transport fares and the prices of products brought to markets from different parts of the country. Maintaining the reduced VAT rate is therefore intended to preserve the existing tax relief while the proposed extension remains under consideration.

However, the proposal is not yet the same as an approved extension. The bill must go through the required legislative process before the government can implement the proposed change. The outcome will determine whether the reduced VAT rate remains in place for the additional 90 days.

The government’s proposal also comes amid wider public concern about the cost of living and the financial pressure facing many Kenyans. Fuel taxation remains one of the issues that can influence transport costs and the prices paid by consumers.

If Parliament approves the measure, the eight per cent VAT rate on petroleum products would continue for another three months under the proposed arrangement. Until then, the extension remains subject to the legislative process and any further developments concerning the bill.

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