By Mumo Judah
Bunge Towers, Nairobi | June 4, 2026
Senators have intensified pressure on the Kenya Revenue Authority (KRA) over the impact of multiple taxes and levies on fuel prices, with lawmakers calling for tax reforms to ease the rising cost of living facing Kenyan households and businesses.
The concerns emerged during a session of the Senate Standing Committee on Energy, where KRA officials appeared to explain the country’s petroleum taxation framework, fuel importation processes, customs administration, and the implementation of the Government-to-Government (G-to-G) fuel import arrangement.
Leading the scrutiny, Tana River Senator Danson Mungatana questioned the necessity of maintaining the nine taxes and levies currently imposed on petroleum products, asking KRA to identify those that could be eliminated to lower fuel costs.
“Among the nine taxes imposed on fuel, which taxes can be dropped to make the fuel cheaper in Kenya?” Mungatana asked.
The senator further questioned why the government had focused solely on Value Added Tax (VAT) when seeking to cushion consumers from high fuel prices.
“He further added that the minister has the power to vary the VAT on fuel. We want to know if we can give the minister powers to vary the other eight taxes on petroleum products,” he said.
Senate Energy Committee Chairperson and Siaya Senator Oburu Oginga echoed the concerns, arguing that broader tax reductions would have a greater impact on consumers.
“Why did the government target VAT only instead of reducing all the nine taxes and levies by a small margin?” Oginga posed.
Responding to the lawmakers, Dr. Lilian Nyawanda, the Commissioner for Customs and Border Control at KRA, defended the existing framework, explaining that the Cabinet Secretary’s options were limited under the current legal provisions.
“The Cabinet Secretary had a leeway to reduce the VAT and that is why he was quick to reduce it as the low-hanging fruit,” Dr. Nyawanda told the committee.
She further explained that VAT and excise duty are assessed differently, noting that VAT is charged based on customs value—which includes the cost of the product, freight and insurance—while excise duty is calculated according to the volume of petroleum products imported.
Nominated Senator Veronica Maina sought clarification on when taxes and levies are imposed, asking whether they are collected before or after fuel enters the local market.
The hearing also turned to the controversial issue of contaminated fuel reportedly imported aboard the vessel MV Paloma. Kakamega Senator Boni Khalwale demanded accountability and sought details on the amount of revenue KRA collected from the shipment.
Khalwale further proposed the temporary suspension of certain levies to cushion Kenyans from economic hardships.
“We should stop railway and road maintenance levy until when the economy improves and the Iran-USA war ends,” he said.
Busia Senator Catherine Mumma Ogolla questioned the economic value of transit fuel destined for neighbouring countries and sought an explanation for fuel price disparities across the East African region.
“How does the country benefit from transit cargo that goes to neighbouring countries?” she asked.
She argued that lower fuel prices in neighbouring countries could undermine Kenya’s competitiveness by attracting investors to jurisdictions with lower energy costs.
Meanwhile, Elgeyo Marakwet Senator William Kisang sought projections on the fiscal impact of reducing petroleum taxes, asking KRA to estimate revenue losses if VAT on fuel were reduced from 16 per cent to 8 per cent or if petroleum products were zero-rated.
In her response, Dr. Nyawanda maintained that KRA has put in place systems to ensure accountability in petroleum taxation and movement.
“KRA and KPC systems are integrated to ensure seamless taxation,” she said.
However, she acknowledged challenges arising from the complexity of the petroleum supply chain and the large number of players operating within the sector.
“We cannot be able to tell if the fuel is under Government-to-Government arrangement or not,” she said.
Dr. Nyawanda added that the growing number of stakeholders has complicated efforts to fully integrate fuel monitoring systems.
“We have so many players in the fuel market that makes it convoluted and hard to implement the integrated fuel system,” she told senators.
KRA maintained that its role is limited to customs administration, tax assessment and cargo clearance. The authority said all petroleum imports are processed through the Integrated Customs Management System (iCMS), with taxes and levies collected before products are released for local consumption.
The authority also recommended greater integration of government systems and stronger reporting requirements among agencies involved in the petroleum supply chain, arguing that improved data sharing would enhance transparency, accountability and operational efficiency.
The Senate Energy Committee is expected to compile recommendations after hearing submissions from KRA and other stakeholders as Parliament continues to examine ways of addressing persistent concerns over fuel pricing, taxation and petroleum supply management in Kenya.
