A move by Treasury Cabinet Secretary John Mbadi to cut Value Added Tax (VAT) on petroleum products to eight per cent is facing legal questions.
Under a legal notice dated April 15, Mbadi gazetted a further reduction of VAT from 13 per cent to eight per cent, just a day after reducing the same from 16 to 13 per cent.
Consequently, the Energy and Petroleum Regulatory Authority (EPRA) announced a downward adjustment in fuel prices due to the VAT reduction.
“Pursuant to Legal Notice No 70 dated 15th April 2026, the Cabinet Secretary for National Treasury has revised the value-added tax rate from 13 per cent to 8 per cent,” the regulator announced.
“As a result, the pump price per litre in Nairobi of Super Petrol and Diesel decreases by Sh9.37 and Sh10.21 respectively while that of Kerosene remains unchanged,” Acting Epra director general Joseph Oketch said in the statement.
However, Mbadi may have acted beyond his powers as it emerges that the law only allows him an adjustment of not more than 25 per cent of the specified rate which must be approved by Parliament.
The Treasury CS acted shortly after President William Ruto announced his directive at a public rally in Kisii on Wednesday.
“The pronouncement by Ruto on reducing VAT from 16 per cent to 8 per cent needs parliamentary approval. Any VAT reduction beyond 25 per cent can only be done through parliamentary legislation,” Borabu MP Patrick Osero said.
The VAT Act which currently provides for the 16 per cent VAT can only therefore have allowed Mbadi powers to reduce it to a minimum of 12 per cent.
“The cabinet secretary may, by order published in the Gazette, amend the rate of tax by increasing or decreasing any of the rates of tax by an amount not exceeding twenty-five per cent of the rate specified,” section 6 (1) of the VAT Act states.
The law further requires the reduced VAT rates to be tabled in the house without any delay and parliament is required to approval or reject the reduction within 21 days for the gazette notice to have a legal impetus.
Section 6 (2) states; “Every order made under subsection (1) shall be laid before the National Assembly without unreasonable delay and shall cease to have effect if a resolution of the National Assembly disapproving the order is passed within 20 days of the day on which the National Assembly next sits after the order is laid, but without prejudice to anything previously done thereunder.
Molo MP Kimani Kuria who chairs the National Assembly Departmental Committee on Finance acknowledged the irregularity but said MPs will have an opportunity to regularise the changes.
