KRA reveals Sh9.1 billion revenue hit from fuel price relief measures

The Kenya Revenue Authority (KRA) has forgone Sh9.1 billion in tax revenue over the past two months as part of government measures aimed at shielding consumers and businesses from the impact of rising global fuel prices.

The revenue loss followed the government's decision to reduce Value Added Tax (VAT) on fuel from 16 per cent to 8 per cent between April and May 2026, according to KRA Commissioner for Customs and Border Control, Lilian Nyawanda.

Speaking before the Senate Standing Committee on Energy, Nyawanda said the tax relief intervention was designed to cushion Kenyans from volatile international fuel markets and ease pressure on household and business budgets.

“KRA has forgone KSh 9.1 billion in tax revenue between April and May 2026 following the reduction of VAT on fuel from 16 per cent to 8 per cent as part of measures aimed at cushioning consumers from rising global fuel prices,” she said.

The disclosure came as lawmakers sought clarification on recent developments in the petroleum sector, including the controversial Premium Motor Spirit (PMS) consignment transported by the vessel MT PALOMA, which remains under investigation.

Addressing concerns over the shipment, Nyawanda assured senators that the fuel never entered the Kenyan market. She explained that the consignment had been redirected to other destinations and that all related customs entries had since been cancelled.

She further revealed that taxes amounting to Sh5.1 billion, which had been paid by various Oil Marketing Companies (OMCs) through the principal importer linked to the vessel, would be transferred to customs declarations for future fuel consignments.

“The consignment was re-shipped to other markets and did not enter the Kenyan market,” Nyawanda told the committee.

The commissioner emphasized KRA's role in ensuring the uninterrupted supply of petroleum products through efficient customs administration and trade facilitation.

According to Nyawanda, the authority works closely with partner government agencies responsible for quality assurance and compliance checks, while facilitating the importation and clearance of petroleum products into the country.

“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.

She noted that the authority's mandate remains limited to customs clearance, tax assessment, levy collection, transit control and trade facilitation, stressing that other agencies are responsible for fuel quality verification and regulatory oversight.

KRA reiterated its commitment to facilitating legitimate trade, enforcing tax and customs laws and supporting government interventions aimed at protecting consumers while maintaining a stable and secure petroleum supply chain.