Market News

Lawmakers in the United States (U.S) have unveiled a draft bill seeking to impose a 5 percent excise tax on remittances sent abroad, a move that could significantly affect immigrant communities, including millions of Nigerians.

The proposal marks another major policy shift under President Donald Trump’s administration, which has introduced stringent immigration and trade policies in recent months.

As this move broadly impacts immigrant families, Nigerians are expected to be among those most affected, given Nigeria’s reliance on diaspora remittances. The proposal, introduced in the House of Representatives, targets payments made by U.S residents to recipients in foreign countries.

Economic implications

According to Central Bank of Nigeria (CBN) Governor Olayemi Cardoso, between January and October 2024, Nigeria received $4.22 billion in remittances via international money transfer operators (IMTOS).

Although it is unclear how much of this total originated from the United States. Under the proposed legislation, verified U.S citizens would be exempt and permitted to claim the tax as a credit.

“There is hereby imposed on any remittance transfer a tax equal to 5 per cent of the amount of such transfer,” the bill states.

The legislation further specifies that the sender would bear the tax burden, with payments remitted quarterly to the Secretary of the Treasury. However, remittances sent through qualified transfer providers by verified senders from the United States would be excluded.

Broader policy changes under Trump’s administration 

In January, U.S Immigration and Customs Enforcement (ICE) identified nearly two million undocumented immigrants for deportation. That same month, Trump announced plans to revoke birthright citizenship privileges for children born to non-citizens.

On the trade front, Trump imposed sweeping global tariffs on March 2, including a 1 per cent duty on Nigerian exports.

In response to China’s earlier 84 percent tariff hike, the U.S raised tariffs on Chinese imports from 104 percent to 125 percent, while sparing several other nations. However, on May 12, the U.S and China reached an agreement to ease trade tensions.

Under the deal, U.S tariffs on Chinese imports will drop from 11 per cent to 0 per cent, while China will cut duties on US goods from 125 per cent to 10 per cent.

If enacted, the 5 per cent remittance tax could place an added financial strain on Nigerian households, which rely heavily on money sent from abroad to support education, healthcare, and daily living expenses.

With the legislation still in its early stages, observers are closely monitoring developments as the bill progresses through Congress.