OpenAI recently informed Kenyan users that a 16% Value Added Tax (VAT) will be applied to ChatGPT services starting May 1, 2025. This move aligns with Kenya’s ongoing push to widen its tax base, with a strong focus on capturing revenue from the expanding digital economy.
Why the VAT on ChatGPT in Kenya?
Over the past few years, Kenya has steadily increased its list of taxable goods and services. Examples include bread, mobile money transactions, and various digital levies. This latest update—applying VAT to ChatGPT subscriptions—falls within a broader tax reform strategy aimed at the digital space.
Initially, the government introduced the Digital Service Tax (DST) in 2021, targeting non-resident digital service providers. However, the DST was eventually replaced by the Significant Economic Presence (SEP) tax, following changes outlined in the Tax Laws (Amendment) Act, 2024.
OpenAI’s email to users clearly stated: “We want to inform you about the introduction of a value-added tax (VAT) on your invoice which will be implemented starting May 1, 2025. In compliance with Regulation 3 of the VAT EIDMS Regulations, we will be required to charge and collect a VAT of 16% on your invoice. If you have a valid Kenya Personal Identification Number (PIN), please update the Tax Status and ID section in your OpenAI account to ensure proper documentation.”
This change places OpenAI alongside other global tech platforms such as Google, Netflix, and Meta, all of which are now required to collect VAT on digital services in Kenya.
What Kenyan Users Must Do
To stay compliant, Kenyan users must update their KRA Personal Identification Number (PIN) in the Tax Status section of their OpenAI account. Doing so ensures accurate tax documentation and aligns with Regulation 3 of the VAT Electronic Invoicing and Digital Monitoring System (EIDMS) framework.
Impact on ChatGPT Users in Kenya
Starting May 1, 2025, users will notice higher subscription fees due to the VAT. Although the tax is officially levied on OpenAI, the cost will be passed on to subscribers. This could significantly affect students, researchers, content creators, and small businesses who rely heavily on ChatGPT for productivity, writing, and data analysis.
As more services move online, the Kenyan government continues to adapt its tax framework. For users, it’s essential to stay informed and adjust account settings to meet new tax requirements.
