Starting November 1, 2025, Nigerians will see higher bills when using ChatGPT and other paid OpenAI services. This is because Nigeria is enforcing a new rule that requires foreign companies to add a 7.5% VAT on their services for Nigerian users.
So if you were paying ₦31,500 per month for ChatGPT Plus (about US$20), your new bill now includes tax, taking it to ~₦33,862.50 (≈US$22.43). That’s the new normal.
OpenAI confirmed this via email, citing Nigeria’s Value Added Tax Act (as amended) and aligning with an FIRS Information Circular 2021/19. They also asked users to include their Tax Identification Number (TIN) in payment settings so that tax documentation can be properly recorded.
Why is this Happening now?
Nigeria is updating its VAT rules to collect revenue from the growing digital economy. New rules require foreign digital service providers, companies outside Nigeria that offer services to Nigerian users, to register for VAT, charge it, and send it to Nigeria’s tax authority, now known as NRS.
This change aligns with a global trend: countries are requiring that taxes be collected locally when services are used locally, even if those services come from abroad. In Nigeria, the standard VAT rate is 7.5%. To assist with this, Nigeria released Guidelines on Simplified VAT Compliance Regime for non-resident suppliers in 2021 (Circular 2021/19). According to these rules:
- Digital services provided to Nigerians (whether to consumers or businesses) by non-resident companies are taxable.
- These suppliers must register, issue invoices that include VAT, collect the VAT from customers, and send it to Nigerian tax authorities.
- The law allows NRS to appoint collection agents when needed.
- Recent tax reforms, including those in Nigeria’s 2025 Tax Act, strengthen these obligations. They include requirements for fiscalisation, e-invoicing, and specific sequences for invoices.
Who Bears the Burden?
- You: Your subscription cost goes up because VAT is added.
- OpenAI (or any provider): They must follow the rules, which means they have to register, charge the correct amount, and pay the tax to the government.
- Nigerian Businesses (B2B): In Nigeria, some businesses (B2B) face a “reverse charge.” This means if the provider doesn’t collect VAT, you as the recipient may have to report it yourself.
Are there any benefits? Yes, there are some. Local tech companies now have a fairer chance, as foreign digital providers will follow the same tax rules. This helps reduce unfair pricing. Also, Nigeria’s reform offers businesses a chance to recover input VAT and provides clearer guidelines for compliance.
What This Means (Beyond Higher Bills)
- Startups and creators relying on AI tools will now face increased costs. That can squeeze margins, especially for micro businesses and individuals in Nigeria.
- Subscription Fatigue: some users may cancel or downgrade because the extra cost feels burdensome.
- Enforcement + Disputes: with digital tax rules, definitions, thresholds, and compliance often get murky. Providers and users might dispute when VAT applies, or how it’s calculated.
- Administrative Friction: OpenAI must now deal with tax registration, local invoicing, remittances — processes that could cause delays, errors, or confusion.
- Precedent: this sets expectations that other global AI/digital tools used in Nigeria may also face VAT. It’s not just ChatGPT — potentially many foreign software, cloud, AI-based platforms.
This new surcharge is more than just a VAT line item. It marks a big change in how Nigeria views the digital economy. The government is not simply allowing foreign tech companies to operate in Nigeria anymore; it wants its fair share of revenue.
For users in Nigeria, this means paying more for the same AI tools. However, this could lead to a fairer system where everyone follows the rules and digital tools contribute to taxes.
There’s still a gap between rules and how they are enforced. Will OpenAI handle invoices correctly? Will the payments be made on time? Will users accept these changes or push back? We will have to wait and see. But starting November 1, the cost of AI in Nigeria will increase, and many people will notice the difference.
