Trump’s New Bill May Slash Nigeria’s $21bn Remittance

The United States recently passed a new bill that would impose a 3.5% tax on money transfers made by non-citizens to recipients overseas, potentially dealing a serious blow to Nigeria’s foreign exchange earnings from diaspora remittances.

The provision is contained in the “One Big Beautiful Bill Act,” a sweeping legislative package by US President Donald Trump and recently passed by the US House of Representatives.

If enacted into law, the remittance tax will apply to all international money transfers made by individuals who are not US citizens, including green card holders and temporary visa recipients. The tax is expected to be deducted at the point of transaction by banks and remittance platforms and remitted to the US Treasury on a quarterly basis.

With no exemption threshold, the tax will affect even the smallest of transfers and could significantly alter the behaviour of senders. Nigeria, one of the top recipients of remittances globally, is expected to be among the hardest hit.

According to the Central Bank of Nigeria, personal remittances into the country reached $20.93bn in 2024, making it the highest level in five years and a critical component of Nigeria’s balance of payments.

The figure rose by 8.9 per cent year-on-year, the CBN noted earlier in April this year. The Centre for Global Development ranked Nigeria among the top 10 countries most exposed to the proposed tax, alongside Mexico, India, China, and the Philippines, among others.

The organisation also noted that the 3.5 per cent levy could cost Nigeria as much as $215m annually in lost remittance value, with wider implications for families and the economy.

Although it is not currently clear what portion of the remittance comes from the US, Nigerians in the United States were estimated to have sent over $6bn home based on available research as of 2015.

The new tax, if enforced, could discourage formal remittance transactions and push senders towards unregulated informal channels to avoid extra costs.

According to the Agusto Diaspora Remittance Industry Report, Africa received an estimated $94.8bn in diaspora remittances in 2023, with Egypt and Nigeria being the primary recipients, accounting for nearly half of the continent’s inflows.

The rating company said that in Nigeria, remittances have not only supported household consumption but have also significantly strengthened foreign reserves.

“The sustained inflow of funds highlights the diaspora’s commitment to family and community welfare, emphasising the growing importance of remittances in the country’s economic landscape,” a part of the report read.

Although the proposed tax would not apply to US citizens, it will affect about 47.8 million immigrants residing in the United States as of 2023, according to the latest American Community Survey from the US Census Bureau.

Of them, nearly three-quarters were in the country legally as naturalised citizens, legal permanent residents (also known as green card holders), or holders of temporary visas.