US Lawmakers propose 5% Tax on Foreign remittances, raising concerns for Nigeria

In a move likely to unsettle immigrant communities, lawmakers in the United States have introduced a draft bill proposing a 5 per cent excise tax on all money transfers sent abroad.

The bill, presented by House Republicans on Monday, targets financial remittances from US residents to beneficiaries in other countries.

This proposal could pose significant challenges for countries such as Nigeria, which heavily rely on diaspora remittances. Data from the Central Bank of Nigeria (CBN) revealed that between January and October 2024, the country received $4.22 billion in diaspora remittances through International Money Transfer Operators (IMTOs). However, the CBN did not specify how much of this amount originated from the United States.

The draft legislation explicitly states: “There is hereby imposed on any remittance transfer a tax equal to 5 per cent of the amount of such transfer.” According to the bill, this tax would be paid by the sender and remitted quarterly to the US Treasury Department. Verified US citizens would be exempt and allowed to claim the levy as a credit, with the exemption also applying to remittances sent through authorised channels by verified US citizens.

This proposed tax is one of several stringent policies recently introduced under President Donald Trump’s administration, which has intensified its stance on immigration and international trade. Earlier in January, US Immigration and Customs Enforcement (ICE) identified nearly two million undocumented immigrants for deportation. The president has also reiterated his call for an end to birthright citizenship for children born in the United States to non-citizens.

On the trade front, the administration’s assertive approach has continued to draw global attention. On 2 March, the US imposed new tariffs, including a 14 per cent duty on Nigerian exports. Nevertheless, trade tensions between Washington and Beijing appear to be easing. A new agreement reached on 12 May will see US tariffs on Chinese goods reduced from 145 per cent to 30 per cent, while China is expected to lower its tariffs on US imports from 125 per cent to 10 per cent.