Nigerians to Pay 7.5% VAT on ChatGPT and Other OpenAI Services Starting November 1

Starting November 1, 2025, Nigerians using ChatGPT and other paid OpenAI services will begin paying higher subscription fees as a 7.5% Value Added Tax (VAT) takes effect. The new tax follows Nigeria’s updated rules requiring foreign digital service providers to collect and remit VAT for Nigerian users.

OpenAI confirmed the change through an email to subscribers, referencing Nigeria’s Value Added Tax Act (as amended) and FIRS Information Circular 2021/19. The company also requested users to update their payment details with their Tax Identification Number (TIN) to ensure compliance and proper documentation.

For instance, a ChatGPT Plus subscription that previously cost ₦31,500 per month (US$20) will now increase to approximately ₦33,862.50 (US$22.43), reflecting the 7.5% VAT addition.

Why Nigeria is Implementing the Tax

The move aligns with Nigeria’s broader push to capture revenue from the fast-growing digital economy. The Federal Inland Revenue Service (FIRS), now operating through the Nigeria Revenue Service (NRS), has been enforcing VAT registration for non-resident digital providers since 2021.

Under the Simplified VAT Compliance Regime, any foreign company offering digital services to Nigerian users, including software subscriptions, streaming, online courses, and AI tools, must register for VAT, issue compliant invoices, collect the tax, and remit it to Nigerian authorities.

The reform is part of a global trend. Many countries now require local VAT collection when services are consumed domestically, even if the provider operates abroad. Nigeria’s 2025 Tax Act further strengthens these provisions by adding rules on e-invoicing, fiscalisation, and proper invoice sequencing.

Who Bears the Cost

For consumers, the cost is straightforward: subscription prices will rise as VAT is added to monthly or annual plans.

For OpenAI and other providers, compliance means added administrative work — including VAT registration, invoice generation, and remittances. For Nigerian businesses using tools like ChatGPT Plus, there may also be reverse charge scenarios if VAT is not collected by the provider, meaning the business must self-account for it.

Possible Benefits

While users face higher costs, the change promotes fairer competition. Local startups and SaaS companies previously competing with tax-free foreign services will now operate on a more level playing field. Businesses can also recover input VAT and enjoy clearer compliance frameworks under the new regime.

What It Means for the AI Community in Nigeria

The tax marks a turning point for Nigeria’s digital economy. It signals that the government wants a share of the value created by international tech platforms operating within its borders.

However, it also raises concerns about subscription fatigue among individual creators, freelancers, and startups already facing rising operational costs. Some may downgrade or cancel paid tools due to the added burden.

For OpenAI, this means navigating Nigeria’s local tax processes, including e-invoicing and timely remittance, areas where compliance challenges could arise. It also sets a precedent that other AI and digital service providers will likely follow.

As of November 1, 2025, Nigerians will officially start paying more for the same AI services, not because of price hikes by OpenAI, but because of tax law catching up with the digital age.