Ruto Approves New Tax Changes Affecting Fuel Prices and Building Costs

President William Ruto has approved two new tax laws affecting petroleum products, construction materials and government revenue collection. The changes retain reduced fuel VAT while introducing new tax calculations for selected building supplies.

Ruto signed the Value-Added Tax Amendment Bill and the Kenya Revenue Authority (Amendment) Bill at Eldoret State Lodge on Friday, October 16, 2026. The measures seek to cushion consumers against fuel costs while improving coordination among government revenue agencies.

Government Retains 8% VAT on Petroleum Products

The new VAT law maintains the eight per cent tax rate on petrol, diesel and paraffin for another 90-day period. The government may extend the arrangement for an additional 90 days if tensions in the Middle East persist.

The measure seeks to protect households and businesses from further pressure arising from disruptions in international oil markets. Officials said maintaining the reduced rate would help limit additional tax costs passed on to consumers.

Josephat Nanok, the Deputy Chief of Staff, explained the changes during a briefing with the President. He said the reduced VAT rate would help shield the Kenyan economy from the effects of the Middle East crisis.

Nanok also explained that the Energy and Petroleum Regulatory Authority (EPRA) considered the reduced rate when calculating fuel prices. He said motorists would have faced higher prices if the authority had not factored in the eight per cent VAT.

According to the briefing, the legislation took effect at midnight on October 14, 2026, following advice from the Attorney-General. The government will use the initial period to maintain the reduced rate as it monitors developments in international oil markets.

New Tax Calculations Target Building Supplies

The legislation introduces changes to taxes applicable to selected construction materials, including tiles and ceramic fittings. The adjustments also cover imported float glass from East African countries.

Under the new arrangement, authorities will calculate the tax on construction tiles at Ksh400 per square metre. The change replaces the previous system, which calculated the tax using weight.

The law also reduces the tax on ceramic fittings, including sinks, from Ksh50 to Ksh30 per kilogramme. The government expects these adjustments to support construction activity and efforts to expand affordable housing.

The changes could influence the cost of building materials purchased by contractors and property developers. However, market prices will also depend on transportation expenses, supplier margins and other business costs.

KRA Board to Include Kenya Ports Authority Chief

The second law changes the composition of the Kenya Revenue Authority board. It provides for the managing director of the Kenya Ports Authority (KPA) to become a board member.

The government intends to strengthen coordination between customs operations and revenue collection through the amendment. Officials say closer cooperation could help align decisions affecting KRA and activities at the country's ports.

The changes also provide for the Attorney-General, the Principal Secretary for the National Treasury and the KRA Commissioner-General to serve as substantive board members. The government expects the revised structure to improve institutional coordination and decision-making.

Nanok explained that the Cabinet initiated the bill before Parliament considered it as a money bill. He referred to Article 114 of the Constitution when outlining the legislative process.

How the Changes Could Affect Households

The continued eight per cent VAT rate could help limit fuel costs during the initial 90-day period. Nevertheless, pump prices will continue to respond to international petroleum prices, exchange rates and other operating expenses.

Construction companies could also experience changes in the tax costs associated with selected building materials. Whether buyers ultimately pay less will depend on how businesses incorporate the revised taxes into their selling prices.

Meanwhile, the KRA amendment focuses on governance and cooperation between government institutions. Its practical impact will depend on implementation and whether the revised board structure improves revenue administration.

The two laws therefore target different economic and administrative concerns. One addresses taxation on fuel and construction materials, while the other seeks stronger coordination in government revenue collection.