VAT relief on fuel extended by three months
The Kenyan government has extended an eight percent VAT relief on fuel for three months to mitigate rising costs caused by global market volatility. This decision aims to prevent further inflationary pressure on essential goods and services following the resumption of the US-Iran conflict.
Why it matters
Fuel prices are a primary driver of inflation in Kenya, and this policy intervention is critical for maintaining economic stability for households and businesses.
The government has extended the eight percent Value Added Tax (VAT) on fuel by three months to October 14, in an effort to avert a sharp increase in pump prices in the coming months in the wake of the resumption of the US-Iran war.
The eight percent VAT rate was due to lapse on Tuesday (July 14) but has been extended amid rising global prices of fuel, whose effect is expected to hit Kenyans from the August 14 monthly cycle.
VAT on fuel was lowered to 13 percent from 16 percent on April 15 as the government mirrored other economies in reducing taxes on fuel in a bid to cushion consumers following the start of the US-Iran war in February this year.
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