Kenya: KRA Forgoes Sh9.1bn in Taxes to Cushion Consumers From Fuel Price Surge

Nairobi — The Kenya Revenue Authority (KRA) has forgone Sh9.1 billion in tax revenue over the past two months following the government's decision to reduce Value Added Tax (VAT) on petroleum products from 16 percent to 8 percent in a bid to shield consumers and businesses from rising global fuel prices.

Speaking before the Senate Standing Committee on Energy, KRA Commissioner for Customs and Border Control Dr. Lilian Nyawanda said the tax relief measures were implemented between April and May 2026 to ease the burden of escalating fuel costs on households and businesses.

Nyawanda also addressed concerns surrounding a Premium Motor Spirit (PMS) fuel consignment delivered by the vessel MT PALOMA, which is currently under investigation.

She clarified that the fuel cargo did not enter the Kenyan market and was instead re-shipped to other destinations.

According to KRA, customs entries related to the consignment have since been cancelled.

Nyawanda further revealed that taxes amounting to Sh5.1 billion paid by various Oil Marketing Companies (OMCs) through the principal importer of the MT PALOMA cargo will be transferred to customs declarations associated with subsequent fuel imports.

She emphasized that KRA's role in the petroleum supply chain is limited to customs administration, tax collection and trade facilitation, while quality assurance and compliance verification are undertaken by relevant government agencies.

"KRA supports the petroleum supply chain through the expeditious processing of import documentation, timely assessment and collection of duties, VAT, levies and other statutory charges, as well as the prompt release of cargo at petroleum depots in Mombasa and across the country," Nyawanda said.

The tax authority noted that it continues to facilitate the importation and clearance of petroleum products once approvals have been granted by partner government agencies responsible for regulatory oversight.

Nyawanda told senators that KRA remains focused on ensuring efficient customs operations to support a steady supply of fuel into the country while maintaining compliance with tax and customs laws.

She added that the authority's mandate includes customs clearance, tax assessment, levy collection, transit control and trade facilitation, all of which are critical in maintaining an efficient petroleum supply chain.

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