President William Ruto has signed into law two bills introducing major changes to Kenya’s tax framework and the governance and financing of the Kenya Revenue Authority (KRA), including a temporary reduction in Value Added Tax (VAT) on petroleum products from 16 per cent to 8 per cent.
The President assented to the Tax Laws Amendment Bill, 2026, and the Kenya Revenue Authority Amendment Bill, 2026, at State Lodge in Eldoret, completing the legislative process following their passage through the National Assembly.
The fuel VAT reduction will take effect for 90 days, with the Cabinet Secretary for the National Treasury empowered to extend the period by a further 90 days through a Gazette notice.
Deputy Chief of Staff in the Executive Office of the President Josphat Nanok said the measure extends the fuel tax relief introduced in April 2026 in response to the economic effects of the crisis in the Middle East.
The move is intended to cushion households, motorists and businesses against rising fuel prices, which have continued to exert pressure on transport costs, essential commodities and the general cost of living.
However, the extent to which consumers will benefit will depend on how the tax reduction is reflected in pump prices and the wider costs of goods and services.
Beyond petroleum taxation, the Tax Laws Amendment Act introduces changes to excise duty on selected construction materials, in a move expected to influence the construction and housing sectors.
Under the new provisions, the basis for calculating excise duty on tiles shifts from weight to size, while excise duty on sanitary ware, including ceramic sinks and similar fixtures, drops from KSh50 to KSh30 per kilogramme.
The law also aligns the classification of imported flat glass with East African Community protocols, allowing qualifying glass products originating within the region to enter Kenya without excise duty.
The changes are expected to adjust the tax burden on selected building materials and could provide some relief to businesses involved in construction and housing, although the final effect on prices will depend on market conditions.
The second legislation, the Kenya Revenue Authority Amendment Act, 2026, introduces changes to the composition, administration and financing of the country’s principal tax collection agency.
The amendments revise provisions governing the appointment and removal of board members by eliminating references to ex-officio membership, aligning the law with the authority’s current board structure.
The legislation also clarifies the respective responsibilities of the President and the Cabinet Secretary in matters relating to resignations and termination of board appointments.
Additionally, the Managing Director of the Kenya Ports Authority will sit on the KRA board, reflecting the operational relationship between revenue collection and port activities.
On financing, the law provides for KRA to receive an amount equivalent to not less than two per cent of the revenue it estimates collecting in each financial year.
The provision establishes a funding framework tied to the authority’s projected revenue collections, with implications for its capacity to finance operations and strengthen revenue administration.
The amendments further update the list of legislation covered by KRA’s revenue-related mandate, including the Retirement Benefits Act, the Tobacco Control Act and the Tea Act.
The implementation of the reduced VAT on petroleum products is expected to attract close attention from consumers and businesses, particularly amid concerns over rising fuel prices and their effect on household expenditure.
Fuel prices are a major component of transport and distribution costs in Kenya, meaning changes in petroleum taxation can influence the prices of food, manufactured goods and other essential commodities.
The 90-day relief period provides a temporary intervention, with the possibility of an extension depending on the National Treasury’s decision.
The two laws mark changes to both Kenya’s tax policy and the institutional framework governing revenue collection, as the government seeks to address cost-of-living pressures while strengthening the administration and financing of KRA.
