Nigerians to be affected as US moves to Tax diaspora remittances

Nigerians sending money home from the United States could soon face new financial hurdles as US lawmakers propose a 5% excise tax on all international remittances.

The draft bill, introduced by House Republicans, would impose the tax on money transfers sent by US residents to recipients abroad. The proposal, if passed, would significantly impact Nigeria, one of Africa’s top recipients of diaspora funds.

According to the Central Bank of Nigeria (CBN), Nigerians received $4.22 billion in remittances via International Money Transfer Operators (IMTOs) between January and October 2024. While it’s unclear how much of this came specifically from the US, the country remains a key source of these inflows.

The bill states: “There is hereby imposed on any remittance transfer a tax equal to 5 percent of the amount of such transfer.” The tax would be paid by the sender and collected quarterly by the US Treasury Department.

Notably, verified US citizens would be exempt from the levy and allowed to claim it as a credit, as would verified senders using authorized providers.

This move is part of a broader trend under the Trump administration to tighten immigration and financial regulations. Earlier this year, US Immigration and Customs Enforcement (ICE) listed nearly two million undocumented immigrants for deportation, while Trump renewed his push to end birthright citizenship.

In the economic arena, the US has also taken a hard line, including the imposition of a 14% tariff on Nigerian exports in March. Meanwhile, diplomatic tensions between the US and China appear to be easing, following a recent agreement that significantly reduced tariffs on both sides.