US Lawmakers Propose 5% Tax on Remittances: Nigerian Diaspora May Be Affected

A proposed bill introduced by Republican lawmakers in the United States is set to impose a 5% excise tax on all international money transfers a move that could significantly impact Nigerians living abroad who regularly send funds home.

According to the draft legislation, the new tax would apply to remittances sent by U.S. residents to recipients in foreign countries. The sender would be responsible for the levy, which would be collected quarterly by the U.S. Treasury Department. However, verified U.S. citizens and individuals using authorized remittance providers would be exempt from the tax and could claim it as a credit.

The development comes as Nigeria remains heavily reliant on diaspora inflows to support its economy. Between January and October 2024, Nigeria received $4.22 billion in diaspora remittances via International Money Transfer Operators (IMTOs), according to Central Bank of Nigeria (CBN) Governor Olayemi Cardoso.

Although the exact contribution from U.S.-based Nigerians wasn't specified, the U.S. is a major source of remittance flows.

This bill is part of a broader shift in U.S. immigration and economic policy. Under former President Donald Trump’s revived administration, stricter immigration enforcement and protectionist trade moves have returned to the fore.

Earlier this year, nearly two million undocumented immigrants were listed for deportation, and Trump renewed his campaign to eliminate birthright citizenship for children born to non-citizens.

On the trade front, Nigeria was also impacted by a 14% tariff imposed by the U.S. in March, part of sweeping duties targeting several countries. Meanwhile, tensions between the U.S. and China appear to be easing after both sides agreed to significant tariff reductions in May.

Diaspora Nigerians are advised to monitor the bill's progress closely, as its passage could alter the financial landscape for cross-border family support and investment.