By Summary
- U.S. House Republicans introduce draft bill to impose 5% tax on remittances sent abroad
- Nigerians likely to be hit hard due to heavy reliance on diaspora inflows
- Verified U.S. citizens exempt; tax to be paid quarterly by senders
In a move that could have far-reaching implications for immigrant communities worldwide, U.S. House Republicans have unveiled a draft bill proposing a 5% excise tax on all remittance transfers sent from the United States to foreign countries.
The legislation is expected to particularly impact Nigerians, who receive billions of dollars annually from family members and loved ones abroad.
According to Central Bank of Nigeria (CBN) Governor Olayemi Cardoso, Nigeria received $4.22 billion in remittances through international money transfer operators (IMTOs) between January and October 2024.
Although it is unclear how much of this amount came specifically from the U.S., experts warn that the proposed tax could significantly reduce inflows and place financial strain on families dependent on such funds.
Under the new proposal, verified U.S. citizens will be exempt from the tax and may claim it as a credit. The bill stipulates that the 5% levy is to be paid by the sender and remitted quarterly to the Secretary of the Treasury. Transfers sent through qualified providers by verified U.S. senders will not be subject to the tax.
The draft legislation forms part of a broader wave of immigration and economic reforms under President Donald Trump’s administration.
In January, U.S. Immigration and Customs Enforcement (ICE) identified nearly two million undocumented immigrants for deportation. During the same period, President Trump announced intentions to eliminate birthright citizenship for children born in the U.S. to non-citizens.
Analysts say the proposed remittance tax could dampen diaspora contributions and potentially affect economic stability in countries heavily reliant on such funds.
