By Benadeta Mwaura - Reporter
Kenya, April 16, 2026 - Fresh legal questions have emerged over the government’s decision to reduce Value Added Tax (VAT) on petroleum products, with constitutional lawyers warning that such a move may require full parliamentary approval to take effect.
The debate follows the recent intervention by the Energy and Petroleum Regulatory Authority (EPRA), which announced a reduction in VAT on fuel as part of measures to cushion consumers from rising global oil prices. The move came shortly after a sharp increase in pump prices, with petrol and diesel crossing the KSh200 mark in Nairobi.
However, legal experts argue that while the Executive can propose tax adjustments, the authority to implement substantive changes to tax rates lies squarely with Parliament under the Constitution.
Under Constitution of Kenya 2010, taxation is governed by clear legal principles. Article 209 vests the power to impose taxes in the national government, but crucially, Article 210(1) provides that no tax or licensing fee may be imposed, waived, or varied except as provided by legislation.
In effect, any significant adjustment to an existing tax framework must be anchored in law passed by the National Assembly.
Legal analysts point out that reducing VAT from 16 percent to 8 percent, effectively a 50 percent cut, constitutes a fundamental change to the tax structure, not a minor administrative adjustment.
As such, it would require an amendment to the Value Added Tax Act 2013 through a formal legislative process.
“Such a reduction cannot be effected purely through administrative action or regulatory circulars. It must go through Parliament because it alters the substance of the law,” said Nairobi-based constitutional lawyer Willis Otieno in previous public commentary on tax changes, reflecting a broader consensus within the legal community.
While the National Treasury of Kenya, through the Cabinet Secretary, has limited powers to adjust certain tax parameters via legal notices, these powers are typically restricted to minor variations within predefined statutory thresholds. A reduction of this magnitude, experts argue, falls outside those limits.
The controversy has also revived memories of a similar standoff in 2018, when former President Uhuru Kenyatta intervened in a dispute over VAT on petroleum products. At the time, Parliament had approved the implementation of 16 percent VAT on fuel, triggering public outcry over rising living costs.
In response, the President declined to assent to the Finance Bill in its initial form and instead referred it back to the National Assembly of Kenya, proposing a 50 percent reduction of the VAT rate on petroleum products from 16 percent to 8 percent.
Parliament subsequently debated and passed the amended provisions, giving the change legal force.
That precedent, legal scholars argue, underscores the constitutional pathway required for such tax adjustments, legislative amendment, not executive directive.
“The 2018 process is instructive because it followed the law. Any similar reduction today must equally be subjected to parliamentary scrutiny and approval,” noted tax expert and public policy analyst Alexander Owino in past media engagements on fiscal policy.
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The current situation, however, appears less clear-cut. While the government has framed the VAT reduction as a temporary relief measure to cushion consumers amid global oil price volatility, questions remain over whether the proper legal procedures have been fully observed.
At the heart of the issue is the balance between urgent economic intervention and constitutional compliance.
On one hand, the government faces pressure to respond quickly to rising fuel costs and the broader cost-of-living crisis.
On the other, the rule of law requires that even urgent measures adhere to established legislative processes.
The implications extend beyond fuel pricing.
If implemented without parliamentary approval, the VAT adjustment could face legal challenges, potentially creating uncertainty in the market and complicating fiscal planning.
It also raises broader concerns about the separation of powers and the role of Parliament in safeguarding public finance.
For consumers, the distinction may appear technical. What matters immediately is the price at the pump.
But for the legal and policy framework underpinning Kenya’s economy, the question is fundamental: can tax laws be altered through administrative action in times of crisis, or must the Constitution be followed regardless of urgency?
As the debate unfolds, attention is likely to shift to Parliament, where lawmakers may be called upon to either ratify the changes or demand a formal legislative process.
Until then, the VAT cut, while offering temporary relief on paper, remains at the centre of a deeper constitutional question, one that goes beyond fuel prices and into the integrity of Kenya’s tax system.