Amanze Chinonye
Kenyan President William Ruto has signed legislation extending reduced value-added tax (VAT) on fuel for 90 days, revising taxes on selected construction materials and changing the governance and funding arrangements of the Kenya Revenue Authority (KRA), Prime Business Africa reports.
The fuel-tax extension maintains VAT on petrol, diesel and kerosene at 8%, half the standard rate of 16%, to cushion households and businesses against rising energy costs. The measure comes amid upward pressure on international oil prices linked to conflict in the Middle East, which has increased pressure on Kenya’s fuel-import bill and transport costs.
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The government has forgone an estimated 54 billion Kenyan shillings in revenue during the previous six months of reduced fuel VAT, with a further 27 billion shillings projected over the next three months.
The extension offers temporary relief to consumers but reduces revenue available to finance public services and other government expenditure.
The Tax Laws (Amendment) Act, 2026, also revises excise-duty rules for selected construction materials. The changes include calculating duty on ceramic tiles by surface area rather than weight and reducing the reported duty on specified sanitary ware from 50 shillings to 30 shillings per kilogramme. The amendments are intended to ease costs in the construction and housing sectors, although the extent of any price reductions will depend on whether businesses pass the tax savings on to consumers.
Separately, the Kenya Revenue Authority (Amendment) Act, 2026, expands the tax agency’s board to include the managing director of the Kenya Ports Authority (KPA). The National Assembly said the change recognises the close operational relationship between the two institutions, particularly in port operations, customs administration and revenue collection.
“This is an efficiency measure due to the co-dependent nature of the operations of both the Kenya Revenue Authority and the Kenya Ports Authority,” a National Assembly brief said.
The amendment also revises provisions governing KRA board membership, removing the ex-officio designation from specified positions and changing the legal framework for appointments, tenure and termination. Parliament passed the Bill on Oct. 7 after it was sponsored by National Assembly Majority Leader Kimani Ichung’wah.
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The legislation also revises KRA’s funding arrangements, linking its allocation to projected annual revenue collections and providing for incentives tied to quarterly collections above target, according to reports on the law. The precise funding formula should be verified against the signed legislation.
The measures come as Kenya seeks to balance efforts to contain fuel and construction costs with the need to strengthen domestic revenue collection. Their impact will depend partly on international oil prices, exchange-rate movements and the extent to which tax reductions are passed on to consumers.
The effectiveness of the KRA reforms will depend on whether closer coordination between the tax and port authorities improves customs administration and revenue collection.
Amanze Chinonye is a Staff Correspondent at Prime Business Africa, a rising star in the literary world, weaving captivating stories that transport readers to the vibrant landscapes of Nigeria and the rest of Africa. With a unique voice that blends with the newspaper's tradition and style, Chinonye's writing is a masterful exploration of the human condition, delving into themes of identity, culture, and social justice. Through her words, Chinonye paints vivid portraits of everyday African life, from the bustling markets of Nigeria's Lagos to the quiet villages of South Africa's countryside . With a keen eye for detail and a deep understanding of the complexities of Nigerian society, Chinonye's writing is both a testament to the country's rich cultural heritage and a powerful call to action for a brighter future. As a writer, Chinonye is a true storyteller, using her dexterity to educate, inspire, and uplift readers around the world.
