A new U.S. tax bill backed by President Donald Trump, known as the ‘One Big, Beautiful Bill’, includes a controversial provision that would impose a 3.5 per cent to five per cent tax on remittances sent abroad by non-U.S. citizens, including green card holders and temporary visa holders.
This measure, currently awaiting Senate approval, is poised to make the United States the most expensive among G7 countries for sending money overseas, with significant repercussions for millions of families worldwide, particularly in Africa.
Remittances are a vital lifeline for many African nations, where they often fund essential needs such as education, healthcare, housing, and small business investments. In 2024, Africa received over $90 billion in remittances, with the U.S. alone accounting for at least $12 billion of that total.
Countries like Nigeria, Ghana, Liberia, and Senegal stand to be hardest hit. For example, Nigerians could lose an estimated $215 per person annually due to the tax, while in Liberia and Senegal, remittances make up about a quarter of their economies.
Experts warn that this tax could reduce the volume of remittance flows, increase informal transfer methods, and disproportionately affect low-income households that depend heavily on these funds. The potential decrease in financial inflows threatens to slow entrepreneurship, job creation, and economic resilience in already vulnerable communities.
African fintech companies facilitating cross-border money transfers, such as LemFi and NALA, may face increased regulatory burdens and operational costs due to the bill’s requirements to verify senders’ citizenship status and apply the tax accordingly. This could lead to higher fees or reduced services for users, further complicating the financial lives of migrants and their families.
The remittance tax follows other Trump administration policies that have reduced U.S. aid to Africa and imposed tariffs that strain trade relations. Critics argue that this bill signals a further withdrawal of U.S. support for African development and could exacerbate economic hardships on the continent.
African governments and the African Union are urged to engage with U.S. lawmakers to seek exemptions or waivers for countries most dependent on remittances. There are calls for coordinated diplomatic responses and efforts to strengthen regional financial sovereignty through digital innovation.
If passed by the Senate, the bill could become law by mid-2025, potentially diverting billions of dollars away from African households and economies.
