Trump’s Proposed 5% Remittance Tax to Hit Kenyans Hard

AfDB Funding in Limbo as Trump Proposes Aid Cut

A controversial proposal by the Trump administration to impose a 5% tax on remittances has sparked concern among global financial experts and migrant communities. Buried on page 327 of what U.S. House Republicans have hailed as “the one, big, beautiful bill,” the proposed levy targets electronic money transfers, which have become a critical financial lifeline for millions worldwide.

The tax plan, crafted by the House Ways and Means Committee, seeks to raise revenue by taxing cross-border remittances, a move that could significantly impact countries like Kenya, where remittances are a key source of foreign exchange.

According to Kenya Wallstreet, the tax would apply to non-U.S. citizens, including green card holders and individuals on H-1B, H-2A, and H-2B visas, effectively covering an estimated 40 million people. U.S. citizens would be exempt from this levy.

Kenya, which relies heavily on remittances to bolster its foreign reserves and stabilize the shilling, could be among the hardest hit.

Data from the Central Bank of Kenya (CBK) shows that remittances are the country’s largest source of foreign exchange, with reserves currently standing at approximately $10.3 billion, covering about 4.6 months of imports. Kenyans in the U.S. alone sent $222.7 million in March, a 10% growth from the previous month – the largest single source of remittances to Kenya.

According to the World Bank, a total of $93 billion was remitted from the U.S. globally, showing the potential scale of the impact if the tax is implemented.

Kenya Wallstreet reports that the proposed tax could stifle these crucial inflows, risking the country’s monetary health and potentially forcing families to rely on more expensive or less secure informal channels.

Also Read: Trump Tariff Hike To Cost Africa $8BN in Duty-Free Exports to US

Impact on Fintech and Financial Inclusion

In addition to threatening foreign reserves, the proposed levy could also disrupt the growing fintech sector that has streamlined cross-border transactions.

Jones Amegbor, founder and CEO of PayInc Group, warned that the 5% tax could “unravel years of work” in building reliable and cost-effective remittance systems, potentially driving transactions underground and away from formal financial oversight.

“We have worked hard to build trust, reliability, and formal rails that protect senders and recipients alike. One can only hope that clearer heads prevail and this bill falls swiftly,” Amegbor said, as quoted by Kenya Wallstreet.

Experts have also raised concerns that the tax would essentially double tax already-taxed migrant incomes and disproportionately impact poorer households that depend on remittances for daily expenses.

This move would conflict with global goals to reduce remittance costs and expand financial inclusion, potentially rolling back years of progress in financial innovation and accessibility.

Global Migration Shifts

With the U.S. tightening immigration policies, many Kenyans have been seeking opportunities in other regions, including the Gulf, Asia, and other African countries.

This shift has been driven in part by the need for alternative sources of income, despite ongoing concerns about worker welfare in some of these destinations.

As the bill heads to a critical House vote, the stakes are high for Kenya and other remittance-dependent economies. If passed by May 25, it could be signed into law by early July, potentially changing the financial muscle for millions of migrant workers and their families.

May 16, 2025

356 2 minutes read

Lawrence Baraza

Lawrence Baraza is a dynamic journalist currently overseeing content at Metropol TV Digital. With a keen focus on business news and analytics, Lawrence guides the platform in delivering insightful, data-driven content that empowers its audience to make informed decisions. Lawrence’s commitment to quality and his ability to anticipate market trends make him a key figure in the digital media landscape. His work continues to shape the way business news is consumed, making a significant impact in the field.