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In a move to align with the Finance Act of 2023, the Energy Petroleum Regulatory Authority (EPRA) has announced a significant revision to the Value Added Tax (VAT) on petroleum products.
Effective from 1st July 2023, the VAT on Super Petrol (PMS), Diesel (AGO), and Kerosene (IK) will increase from 8% to 16%.
This change will impact the maximum wholesale and retail prices of these fuels across the country.
As a result of the VAT revision, the maximum allowed petroleum pump prices in Nairobi will experience a noticeable surge.
The revised rates, effective from 1st July to 14th July 2023, are as follows:
- Super Petrol: An increase of Sh13.49 per litre
- Diesel: An increase of Sh12.39 per litre
- Kerosene: An increase of Sh11.96 per litre
The new fuel prices in Nairobi will be Sh195.53 for Super Petrol, Sg179.67 for Diesel and Sh173.44 for Kerosene.
The impact of the revised VAT on petroleum prices extends beyond Nairobi, affecting major towns across Kenya.
Court order
EPRA’s announcement has caused confusion among members of the public after the High Court issued an order temporarily barring the government from implementing the Finance Bill 2023.
This decision comes as a result of a case filed by Busia Senator Okiya Omtatah, who has challenged the constitutionality of several sections within the bill, arguing that they contravene the Constitution in matters of taxation.
Justice Mugure Thande, presiding over the case, granted interim orders that will remain in effect until Wednesday, July 5, when the matter is scheduled for mention in court.
The Finance Act 2023 encompasses a series of tax measures aimed at generating revenue to support the government's extensive development agenda.
One of the notable provisions in the bill is the introduction of a 16% Value Added Tax (VAT) on fuel, which was expected to contribute substantially to the revenue generation efforts.