KRA Directs Fuel Stations to Update Invoicing Systems for Reduced 8% VAT on Fuel

This directive follows the recent decision by the government to lower VAT on fuel from the previous higher rate as a way to provide some relief to motorists facing high pump prices. The change applies to petrol, diesel, and kerosene, and is expected to last for a temporary period of three months.

Fuel stations that use electronic tax invoicing systems, including third-party solutions connected to KRA’s eTIMS platform, must now add a new tax category and adjust the product codes to reflect the 8% rate. The updates need to cover sales made between April 15 and July 14, 2026. KRA has warned that stations failing to make these changes on time could face audits and penalties for non-compliance. Many station owners are now working quickly with their system providers to reconfigure their software and avoid any issues with tax reporting.

This move comes after public outcry over the recent increase in fuel prices and aims to pass on the benefit of the lower tax directly to consumers at the pump. By ensuring that invoices accurately show the reduced VAT, the authority hopes to make the relief transparent and prevent any confusion or overcharging. The adjustment is part of broader efforts to ease the cost of living, especially for transport operators, small businesses, and ordinary families who feel the impact of fuel costs on daily expenses.

As the deadline for full compliance approaches, fuel retailers are under pressure to complete the technical updates without disrupting their operations. For most Kenyans, the lower VAT is expected to bring a modest reduction in the final price paid at the filling station once the systems are properly aligned. Many will be watching to see how effectively this change translates into actual savings at the pump in the coming weeks.