The Cabinet Secretary for the National Treasury has invoked powers under Section 6(1) of the Value Added Tax Act 2013 to temporarily reduce the VAT rate on petroleum products from 16% to 13%, effective 15 April 2026 to 14 July 2026. 

The affected products are Super Petrol (2710.12.20), Illuminating Kerosene (2710.19.22), and Automotive Gas Oil/Diesel (2710.19.31). This is a crisis-response measure, issued alongside EPRA's April–May 2026 fuel price review which confirmed pump price increases of up to KES 40.30/litre on diesel.

What This Means for Business

Input costs are still rising, despite the relief. 

The VAT cut partially offsets but does not reverse announced higher pump prices. Super Petrol in Nairobi will now cost KES 206.97 per litre, while Diesel climbs to KES 206.84 per litre highlighting a steep increase that will feed through to transport, logistics, and manufacturing cost lines across virtually all sectors.

VAT accounting adjustments are required immediately. 

Businesses that self-account for fuel VAT, operate fuel-intensive fleets, or process petroleum invoices must update their VAT rate inputs from 16% to 13% effective 15 April 2026. This applies to landed cost computations, input tax claims (where VAT on fuel is recoverable), and any fuel surcharge calculations in contracts.

Sectors most exposed

Transport/logistics operators (especially diesel-dependent), agri-businesses, manufacturers, and any business with fuel cost pass-through arrangements in contracts should model the revised cost structure urgently.

Key Takeaways

1. Rate change: VAT on Super Petrol, Diesel, and Kerosene moves from 16% to 13%, effective 15 April 2026.
2. Window is short and defined: The reduced rate expires 14 July 2026 — this is not a permanent amendment to the VAT Act.
3. The root cause is global. The price increases reflect the impact of US-Israel strikes on Iran on 28 February 2026 and subsequent disruption to Strait of Hormuz shipping
4. Post-July risk is real. If geopolitical pressures persist, the removal of both the VAT relief and PDL support in July could produce a second, sharper price shock. 
5. VAT compliance action required now: Update your tax systems, ERP inputs, and eTIMS configurations to reflect the 13% rate on the three affected tariff lines as of today.
   
    

By: Wilson Okello, Felicia Kwamboka