Starting November 1, 2025, the subscription price for ChatGPT in Nigeria will increase as OpenAI begins charging a 7.5% Value Added Tax (VAT) on all paid digital services. This move is align with Nigeria’s VAT Act and brings OpenAI in line with other foreign digital companies like Google and Netflix that already collect VAT from Nigerian users.
Users will now be required to include their Tax Identification Number (TIN) when paying for the service.
VAT and Price Increase Explanation
OpenAI announced that the monthly ChatGPT Plus subscription will rise from about ₦31,500 ($20) to ₦33,862.50 ($22.43) due to the 7.5% VAT charge mandated by Nigerian tax laws. This tax is in accordance with Section 10 of the Value Added Tax Act and guidance from the Federal Inland Revenue Service (FIRS). The requirement to provide a TIN helps to ensure proper tax documentation and aligns with Nigeria’s efforts to broaden the tax base and improve compliance in digital taxation. This means Nigerian users will bear the additional cost, potentially impacting startups and individual users who rely on AI services like ChatGPT for their operations.
How Non-Resident Companies Conduct Business in Nigeria
One key question is how foreign companies like OpenAI legally conduct business and collect VAT without formal incorporation in Nigeria. Under Nigerian law, foreign companies are generally required to register with the Corporate Affairs Commission (CAC) unless exempted.
However, digital service providers operate under a different regulatory framework. Nigeria’s tax rules mandate that non-resident digital companies earning over $25,000 annually from Nigerian users must register, collect, and remit VAT. This is facilitated through digital service tax frameworks, which do not necessarily require full local incorporation like traditional businesses. Instead, these companies comply via specific tax registrations and remittances to the FIRS.
Digital Services and Legal Framework
Nigeria’s legal requirements for business registration primarily address traditional businesses with physical operations. For digital services, the law does not fully account for their unique nature, creating a regulatory grey area.
Policy discussions are underway to amend or clarify the definition of companies doing business in Nigeria to explicitly include digital services. Such reforms would harmonize legal requirements with the realities of the digital economy, protect government revenue, and reduce barriers to technology access.
Summary Points
- OpenAI is implementing a 7.5% VAT on ChatGPT subscriptions for Nigerian users starting November 1, 2025.
- Nigerian users must provide a Tax Identification Number (TIN) to comply with tax documentation requirements.
- The VAT application follows Nigeria’s Value Added Tax Act and efforts to regulate foreign digital companies.
- Foreign digital companies are required to register for VAT collection with the FIRS but may not need full CAC incorporation.
- Nigerian laws on business registration currently do not clearly address digital services, prompting calls for legal reforms.
- This move is part of a broader trend where Nigeria is actively extending tax collection to digital and non-resident companies, integrating them into the national tax system to increase government revenue without imposing new taxes but ensuring compliance with existing frameworks.