President William Ruto has signed into law the Value Added Tax (Amendment) Bill (National Assembly Bill No. 21 of 2026), paving the way for a reduction in fuel prices amid rising global supply pressures linked to instability in the Middle East.

The legislation, which was fast-tracked by the National Assembly of Kenya, reduces Value Added Tax (VAT) on petroleum products by 50% from 16%to 8% cushioning households and businesses from escalating energy costs.

The Bill now Act, sponsored by the Leader of the Majority Party, Hon. Kimani Ichung'wah was introduced and passed on April 16, 2026, without amendments following a request from the Executive for urgent intervention to stabilise fuel prices.

Under the new law, 𝗿𝗲𝗱𝘂𝗰𝗲𝗱 𝗩𝗔𝗧 𝗿𝗮𝘁𝗲 𝘄𝗶𝗹𝗹 𝗮𝗽𝗽𝗹𝘆 𝗳𝗼𝗿 𝗮𝗻 𝗶𝗻𝗶𝘁𝗶𝗮𝗹 𝗽𝗲𝗿𝗶𝗼𝗱 𝗼𝗳 𝟵𝟬 𝗱𝗮𝘆𝘀. 𝗧𝗵𝗲 𝗖𝗮𝗯𝗶𝗻𝗲𝘁 𝗦𝗲𝗰𝗿𝗲𝘁𝗮𝗿𝘆 𝗳𝗼𝗿 𝘁𝗵𝗲 𝗡𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗧𝗿𝗲𝗮𝘀𝘂𝗿𝘆 𝗶𝘀 𝗳𝘂𝗿𝘁𝗵𝗲𝗿 𝗲𝗺𝗽𝗼𝘄𝗲𝗿𝗲𝗱 𝘁𝗼 𝗲𝘅𝘁𝗲𝗻𝗱 𝘁𝗵𝗲 𝗿𝗲𝗹𝗶𝗲𝗳 𝗳𝗼𝗿 𝗮𝗻 𝗮𝗱𝗱𝗶𝘁𝗶𝗼𝗻𝗮𝗹 𝟵𝟬 𝗱𝗮𝘆𝘀 𝗶𝗳 𝗻𝗲𝗰𝗲𝘀𝘀𝗮𝗿𝘆, 𝗼𝗳𝗳𝗲𝗿𝗶𝗻𝗴 𝗳𝗹𝗲𝘅𝗶𝗯𝗶𝗹𝗶𝘁𝘆 𝗶𝗻 𝗿𝗲𝘀𝗽𝗼𝗻𝘀𝗲 𝘁𝗼 𝗲𝘃𝗼𝗹𝘃𝗶𝗻𝗴 𝗴𝗹𝗼𝗯𝗮𝗹 𝗺𝗮𝗿𝗸𝗲𝘁 𝗰𝗼𝗻𝗱𝗶𝘁𝗶𝗼𝗻𝘀.

The law stipulates that 𝘁𝗵𝗲 𝘁𝗮𝘅 𝗰𝘂𝘁 𝘁𝗮𝗸𝗲𝘀 𝗲𝗳𝗳𝗲𝗰𝘁 𝗳𝗿𝗼𝗺 𝗔𝗽𝗿𝗶𝗹 𝟭𝟱, 𝟮𝟬𝟮𝟲.

The implications for consumers are immediate. The government projects that the reduction will 𝗹𝗼𝘄𝗲𝗿 𝘁𝗵𝗲 𝗽𝗿𝗶𝗰𝗲 𝗼𝗳 𝘀𝘂𝗽𝗲𝗿 𝗽𝗲𝘁𝗿𝗼𝗹 𝗮𝗻𝗱 𝗱𝗶𝗲𝘀𝗲𝗹.

Government analysts and the National Assembly leadership maintain that the reduction is a strategic necessity to prevent a cost-of-living crisis.

"An escalation of the cost of fuel has a 'knock-on' effect on the cost of consumer goods and services. This reduction is meaningful and shall significantly ease the burden on Kenyan households with respect to transport costs and the cost of essential goods," the brief noted.