President William Ruto has signed two tax bills into law, keeping the reduced eight per cent Value Added Tax (VAT) on petrol, diesel and paraffin for an initial 90 days as the government seeks to shield consumers from rising international oil prices.

The Tax Laws Amendment Bill, 2026, and the Kenya Revenue Authority (Amendment) Bill, 2026, were signed at Eldoret State Lodge in Uasin Gishu County on Friday, October 16, following their passage by the National Assembly.

The legislation also changes taxes on selected construction materials and revises the governance and funding arrangements of the Kenya Revenue Authority (KRA).

Under the Tax Laws Amendment Bill, the reduced VAT rate on petroleum products may be extended for a further 90 days through a Gazette notice issued by the Cabinet Secretary for the National Treasury.

Deputy Chief of Staff Josephat Nanok said the measure was intended to limit the impact of disruptions in the international oil market linked to the crisis in the Middle East.

“The Bill first sustains the 8 per cent VAT application on petroleum products, that is, petrol, diesel, and paraffin, to ensure that the effect of the crisis that has been seen in the part of the Middle East does not affect the Kenyan economy without the public being cushioned,” Nanok said.

He added that the Energy and Petroleum Regulatory Authority (EPRA) and the Ministry of Energy had incorporated the reduced rate into their fuel price calculations.

Without the lower VAT rate, Nanok said, the fuel prices announced by EPRA would have been higher.

Changes to construction material taxes

The new law also revises taxes on several construction materials, with potential implications for building costs.

Excise duty on tiles will be set at KSh400 per square metre, replacing the previous weight-based approach. The duty on ceramic sanitary ware, including sinks, will fall from KSh50 to KSh30 per kilogramme.

The legislation also updates the classification of imported flat glass to bring it into line with East African Community protocols.

The changes come as households and businesses continue to face pressure from the cost of essential goods and construction materials. However, the extent to which the tax adjustments will affect retail prices remains to be seen.

KRA board and funding arrangements revised

The Kenya Revenue Authority (Amendment) Bill, 2026, introduces changes to the composition of KRA's board and its relationship with other government agencies.

Among the changes, the legislation removes the designation of certain government officials as ex-officio members and provides for the managing director of the Kenya Ports Authority (KPA) to join the board.

Nanok said the move was intended to improve coordination between tax collection and port operations.

“It therefore brings the managing director of KPA into the board so that that relationship is sustained and decisions made in KRA are also felt at the port,” he said.

The amendment also provides for KRA to receive at least two per cent of its estimated annual revenue collections, as reflected in the financial estimates. It further updates the list of laws administered by the authority.

The government expects the changes to support revenue administration while improving coordination between agencies involved in trade and tax collection.

The two laws address separate but related priorities: managing the effect of international oil market disruptions on Kenyan consumers and revising the institutions responsible for collecting public revenue.

The reduced VAT rate on fuel will initially remain in place for 90 days, with a possible extension for another 90 days under the new law.