KRA Reveals Billions Lost After Fuel VAT Decrease To 8%
The Kenya Revenue Authority (KRA) lost Ksh9.1 billion in tax revenue between April and May 2026 as a result of the government’s decision to decrease VAT on fuel from 16% to 8%.
The tax cut was implemented to protect consumers from rising fuel prices caused by global market pressures.
Dr Lilian Nyawanda, KRA Commissioner for Customs and Border Control, revealed the data while testifying before the Senate Standing Committee on Energy on Thursday, June 4.
“Kenya Revenue Authority (KRA) has forgone Ksh9.1 billion in tax revenue between April and May 2026 following the reduction of Value Added Tax (VAT) on fuel from 16 per cent to 8 per cent as part of measures aimed at cushioning consumers from rising global fuel prices,” stated KRA.
She told senators that the reduced VAT rate formed part of broader relief measures aimed at cushioning households and businesses from the impact of volatile global fuel prices.
Beyond the revenue loss, the committee also raised concerns about a fuel consignment delivered by the vessel MT PALOMA, which is currently under investigation.
Fuel importation probe
KRA defends handling of controversial Mt Paloma fuel cargo
Senators question whether fuel may have entered local circulation
Authority says the 66 million litres never entered Kenyan market#CitizenTonight pic.twitter.com/IOGSIJtAfd— Citizen TV Kenya (@citizentvkenya) June 4, 2026
Nyawanda clarified that the consignment in question never entered the Kenyan market and was instead redirected and re-shipped to other destinations.
KRA has since cancelled all customs entries linked to the MT PALOMA consignment, effectively closing the matter from an administrative standpoint.
ALSO READ:
- KRA Reveals Billions Lost After Fuel VAT Decrease To 8%
- Kenya Railways Releases New Fares After Safari Train Route Revamp
- Sports Ministry Responds To Claims Of FKF Suspension
- “We Don’t Need Public Participation!” – Duale Declares Over Laikipia Ebola Facility
- CS Duale Claims 9 Counties On High Alert For Ebola
However, according to Nyawanda, Ksh5.1 billion in taxes paid by various Oil Marketing Companies through the vessel, acting as the principal importer, will be transferred to declarations for subsequent fuel imports, helping offset part of the Ksh9.1 billion revenue loss resulting from the VAT reduction.
“The Ksh5.1 billion paid by Oil Marketing Companies through MT PALOMA will be transferred to declarations covering future fuel imports, which means a significant portion of the Ksh9.1 billion revenue gap from the VAT reduction will effectively be recovered,” stated Dr Nayawanda.
President William Ruto signed the Value Added Tax (Amendment) Bill into law, halving VAT on super petrol, diesel, and kerosene from 16 per cent to 8 per cent to ease the cost of living on April 16.
This was two days after the Energy Petroleum Regulatory Authority (EPRA) announced new fuel monthly prices, which were at a historical all-time high.
The relief measure was initially granted for 90 days, with National Treasury Cabinet Secretary John Mbadi empowered to extend it by a further 90 days should global oil prices remain elevated and supply disruptions persist.
KRA Reveals Billions Lost After Fuel VAT Decrease To 8%
