US House Republicans have introduced a draft bill proposing a 5% excise tax on all remittances sent abroad, a move that could significantly impact African countries heavily reliant on diaspora funds.
The legislation, unveiled on Monday, targets money transfers from US residents to recipients in foreign nations, with the tax to be paid by the sender and collected quarterly by the US Treasury Department.
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The bill, part of President Donald Trump’s broader fiscal and immigration agenda, exempts verified US citizens, who can claim the tax as a refundable credit.
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However, the measure would affect over 40 million non-citizens, including green card holders and visa holders on H-1B, H-2A, and H-2B programs.
The proposal has sparked alarm among African immigrant communities and their home countries, where remittances are a critical economic lifeline.
Nigeria, one of Africa’s top remittance recipients, received $4.22 billion through international money transfer operators between January and October 2024, according to Central Bank of Nigeria Governor Olayemi Cardoso.
Other African nations, such as Ghana, Kenya, and Ethiopia, also depend heavily on these funds, which often surpass foreign direct investment and aid.
The proposal follows other stringent measures under Trump’s second term, including a 14 percent tariff on Nigerian exports and plans to deport nearly two million undocumented immigrants.
The bill is set for a House vote by Memorial Day, May 26, 2025, with lawmakers aiming for passage by July 4. If enacted, the tax could push remittances to unregulated channels, reducing transparency and straining African economies.