Kenya Revenue Authority (KRA) has revealed that it gave up Ksh9.1 billion in tax revenue between April and May 2026 after the government reduced Value Added Tax (VAT) on fuel from 16 per cent to 8 per cent.
The tax cut was introduced as part of measures aimed at shielding consumers and businesses from the sting of rising global fuel prices, which have continued to put pressure on household budgets and operating costs across the country.
Appearing before the Senate Standing Committee on Energy, KRA Commissioner for Customs and Border Control Lilian Nyawanda said the move was a deliberate intervention designed to cushion Kenyans from fluctuations in international fuel markets.
“The tax relief intervention was implemented to mitigate the impact of global fuel price fluctuations on consumers and businesses,” Nyawanda told senators.
Her remarks come at a time when fuel prices remain a key concern for many Kenyans, with transport costs often rippling through the economy and influencing the prices of goods and services.
Nyawanda also addressed concerns surrounding a controversial Premium Motor Spirit (PMS) consignment delivered by the vessel MT PALOMA, which has been the subject of investigations.
She clarified that the fuel shipment never made its way into the Kenyan market, dismissing fears that the consignment could have affected local fuel supplies.
“The consignment was re-shipped to other markets and did not enter the Kenyan market,” she said.
According to the Commissioner, customs entries linked to the shipment have already been cancelled. However, taxes amounting to Ksh 5.1 billion that had been paid by various Oil Marketing Companies (OMCs) through the principal importer have not gone to waste.
Instead, the funds will be transferred and applied to customs declarations for future fuel consignments.
Nyawanda used the opportunity to highlight KRA’s role in ensuring a steady flow of petroleum products into the country. While motorists often focus on the numbers displayed at petrol stations, a complex chain of approvals, documentation and customs procedures takes place behind the scenes before fuel reaches the pumps.
She explained that KRA facilitates the importation and clearance of petroleum products once relevant Partner Government Agencies (PGAs) have completed quality assurance and compliance checks.
“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,” she said.
The Commissioner emphasized that KRA’s involvement in the petroleum sector remains limited to its legal mandate, which includes customs clearance, tax assessment, levy collection, transit control and trade facilitation.
She noted that the Authority does not oversee fuel quality testing or regulatory approvals, responsibilities that fall under other government agencies.
KRA maintained that it remains committed to facilitating legitimate trade, enforcing compliance with customs and tax laws and supporting government measures aimed at protecting the country’s economic interests.
As global energy markets continue to shift, the Authority says it will continue balancing revenue collection with efforts to support a stable and secure petroleum supply chain for the country.
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