Kenya’s government stated that it will maintain the 8% VAT rate on fuel introduced in April 2026, pairing the extension with a KES 945 million subsidy to stabilise pump prices through the July-August cycle.
Kenya’s government confirmed, on 14 July 2026, that it is keeping its reduced 8% value-added tax rate on petroleum products through mid-October, alongside a KES 945 million subsidy to stabilise pump prices in the July-August cycle.
The government first compressed VAT on fuel from 16% to 8% in April 2026, reacting to crude price shocks tied to the US-Israeli military campaign against Iran. That three-month window is now extended another quarter.
The subsidy matters because Kenya has no domestic oil production and sources nearly all refined products through government deals with Middle Eastern suppliers. Disruption risks along the Strait of Hormuz are real—the same regional strain that sent crude climbing in the first place. The extension is essentially a bet that holding prices flat for another 90 days won’t crater state finances, at least not faster than political heat from fuel strikes would.
Earlier, President William Ruto announced a KES 6.5 billion package aimed at cushioning Kenyans from high fuel prices, including a temporary reduction in Value Added Tax (VAT) on fuel products from 16% to 8% on 16 April 2026.
