Proposed U.S. Remittance Tax Poses Threat to Nigeria’s Forex Inflows

U.S. lawmakers have introduced a draft bill proposing a 5% excise tax on remittances sent abroad, which could significantly impact immigrant communities, including Nigerians. The tax would be paid by the sender and collected quarterly by the U.S. Treasury Department. Verified U.S. citizens would be exempt from the levy and could claim it as a credit. The bill also exempts remittances sent via authorized providers by verified U.S. senders. 

Nigeria, which received billions of dollars annually  in diaspora remittances through International Money Transfer Operators, could see a decline in foreign exchange inflows if the bill is passed. Analysts warn that the proposed tax may lead to a reduction in the net value of remittances, potentially causing further depreciation of the Naira. 

The bill is part of a broader set of measures under President Donald Trump's administration, which has recently intensified its immigration and trade policies. In January, nearly two million undocumented immigrants were listed for deportation, and there have been renewed calls to end birthright citizenship for children born to non-citizens. 

A key vote on the bill is expected before May 26, 2025. If passed, the tax could take effect as early as July 2025. Financial experts advise individuals who regularly send money abroad to consider accelerating planned remittances before the bill potentially becomes law. 

WEST AREKAMHE