By Kolawole Ojebisi
The rate at which Nigerians residing in the United States send money to their kith and kin in their native country may start dwindling significantly.
This is as lawmakers in the United States have introduced a draft bill proposing a 5 per cent excise tax on all remittances sent abroad.
The bill, sponsored by legislators elected on the platform of the Republican party, targets financial transfers from US residents to recipients in foreign countries.
The bill was on unveiled on Tuesday.
Though the bill has a sweeping reach and likely to affect immigrant families, the proposed tax poses a challenge for Nigeria because of its heavy reliance on funds sent by its diaspora.
Nigeria’s heavy dependent on foreign remittances was confirmed recently by the Governor of the Central Bank of Nigeria, Yemi Cardoso, who said between January and October 2024 alone, Nigeria received $4.22 billion in diaspora remittances through International Money Transfer Operators (IMTOs),
However, the CBN did not specify what portion of these funds originated from the US.
“There is hereby imposed on any remittance transfer a tax equal to 5 percent of the amount of such transfer,” the proposed legislation states.
The tax would be paid by the sender and collected quarterly by the US Treasury Department.
Verified US 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 US senders.
This development is the latest in a series of tough measures under President Donald Trump’s administration, which has recently ramped up its immigration and trade policies.
Since his return to the White House in January, Trump has initiated series of policies which have negatively affected immigrants in the US.
In January, US Immigration and Customs Enforcement (ICE) listed nearly two million undocumented immigrants for deportation.
The US president also renewed calls to end birthright citizenship for children born to non-citizens, a move which was blocked by federal court.
The administration’s aggressive trade stance has also drawn global attention.On March 2, the US imposed sweeping tariffs, including a 14 percent duty on Nigerian exports.
However, tensions between Washington and Beijing appear to be easing following the just concluded Geneva talks between the two largest economies.
