Kenya Extends Fuel VAT Cut by Three Months to Cushion Consumers From Global Energy Price Volatility

GOOBJOOG NEWS|NAIROBI: The Kenyan government has officially extended by three months a reduced Value Added Tax (VAT) rate on petroleum products, a move aimed at shielding households and businesses from the impact of volatile global energy prices.

Under the extension, VAT on fuel will remain at 8%, instead of reverting to the standard 16%, until mid-October, according to a government announcement.

Energy and Petroleum Cabinet Secretary Opiyo Wandayi said the decision was reached following consultations with the National Treasury to help ease the cost of living and support businesses facing rising operating expenses.

The reduced VAT was first introduced in April this year after global oil prices climbed amid tensions in the Middle East, which raised concerns over disruptions to international energy supplies.

By maintaining the lower tax rate, the government hopes to prevent sharp increases in fuel prices that would have a knock-on effect on transport costs, electricity tariffs, and the prices of essential goods and services.

In addition to the tax relief, Kenya has increased financial support for its fuel price stabilization programme. Wandayi announced that the government had allocated KSh945 million (approximately US$7.31 million) from the Petroleum Development Fund to stabilize pump prices during the next fuel pricing cycle.

The government said the combined measures are intended to preserve economic stability at a time when uncertainty continues to surround global oil markets.

Kenya’s decision also comes as concerns persist over the security of the Strait of Hormuz, one of the world’s most important oil shipping routes. Although oil flows through the waterway have continued, tensions in the region have heightened fears that any disruption could trigger higher crude oil prices and increase fuel import costs for countries that rely on imported petroleum products, including Kenya.