Tanzania Slashes VAT, So Why Are Kenyan Fuel Prices Still High?

Tanzanian VAT Cut Sparks Debate on Kenyan Fuel Prices

Nairobi, Kenya—President Samia Suluhu’s administration in Tanzania has implemented the Finance Act 2025, which includes a reduction of the Value Added Tax (VAT) from 18% to 16%. This move, which became effective on July 1, 2025, has garnered significant attention from Kenyans, sparking a widespread discussion on social media about high fuel prices in their own country.

The Tanzania Revenue Authority (TRA) has clarified that while the VAT reduction is law, its full implementation will depend on a public notice from the Commissioner General. The notice will specify the eligible individuals and the process for implementation, which is currently being finalized.

A Tale of Two Countries: Fuel Prices and Taxes

The VAT cut is expected to contribute to a further decline in fuel costs for Tanzanian consumers. For September 2025, the price of a litre of super petrol in Dar es Salaam is TZS 2,807, which is approximately KSh 145. This stands in stark contrast to the price in Nairobi, where a litre of super petrol is capped at KSh 185.31 for the period between August 15 and September 14, 2025.

While Tanzania’s Energy and Water Utilities Regulatory Authority (EWURA) cited a drop in international oil prices as a factor for their reduced pump prices, Kenya’s Energy and Petroleum Regulatory Authority (EPRA) announced a slight reduction of KSh 1 for super petrol and kerosene in its August review, even as the cost of diesel remained unchanged.

The disparity in fuel prices has led many Kenyans to question their government’s tax policies. Kenya’s Finance Act 2023, for instance, set the VAT on petroleum products at 16%, and the country’s Energy Cabinet Secretary has previously attributed the high cost of fuel to the heavy tax burden. In July 2025, an analysis revealed that taxes and levies made up a significant portion of the total retail price of petrol in Nairobi, accounting for approximately 45%. This includes a blend of various fees, such as excise duty, the Road Maintenance Levy, and the Petroleum Development Levy.

Tanzania Slashes VAT So Why Are Kenyan Fuel Prices Still High

Kenyans React on Social Media

The VAT reduction in Tanzania has fueled a conversation among Kenyans on social media platforms. Kenyans are questioning why their country can’t take similar steps to ease the financial burden on its citizens.

@litmuspaperss suggested lowering the VAT to 15%, which would include a 1% social health authority contribution, and removing other deductions to improve social welfare.
@Nyagacm viewed the move as a positive step towards harmonizing taxes across the East African Community, speculating that other member states with high VAT rates might follow suit.
@moneyacademyKE highlighted the direct link between the VAT cut and lower fuel prices in Tanzania.
@GudaExperience directly contrasted Tanzania’s “bold steps” to ease the burden on its citizens with Kenya’s situation, where fuel prices continue to rise despite a 16% VAT.

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