Proposed Trump Tax To Affect Remittances Payments From Ghanaians, Other Foreigners in US

• The US is considering a new 5% tax on remittance payments from immigrants as part of a proposed tax plan
• This proposed tax plan would cover more than 40 million people, including green card holders and non-immigrant visa holders
• Ghana received over $4.6 billion in total remittances in 2023, with the US being one of the top source countries

A new tax plan for remittances from the US has sparked some concern in the diaspora because of far-reaching implications for home countries like Ghana.

The US legislature's Ways and Means Committee has unveiled a sweeping tax plan which includes a 5% tax on remittance payments.

The tax is expected to disproportionately affect immigrants like Ghanaians living in the US because the bill makes exceptions for most remittance transfers made by US citizens.

AFP reported that the tax would cover more than 40 million people, including green card holders and nonimmigrant visa holders, such as people on H-1B, H-2A and H-2B visas.

In 2023 alone, remittance flows from the U.S. to countries around the world reached $93 billion, according to World Bank figures.

Ghana received over $4.6 billion in total remittances that year, with the US being one of the top sending countries.

Though still under review, the bill’s inclusion of the remittance tax provision is likely to spark pushback from both Democrats and immigrant communities, making its future uncertain.

US President Donald Trump also recently announced that he is finalising a plan to stop remittances” sent by people in the US illegally.

There are concerns that taxing certain remittances could negatively affect communities in countries like Ghana that rely on them, could eventually burden Americans and even cause more immigration to the US.

Importance of Remittances to Africa

In 2023, Sub-Saharan Africa received $54 billion in remitances. Ghana received the second highest inflows within the region, according to the World Bank.

Ghana's $4.6 billion was second only to Nigeria’s $19.5 billion. Ghana's figure was a drop from $4.7 billion in 2022. In 2021, the value of remittances into the country stood at US$4.5 billion.

Remittances are known to be a reliable source of foreign exchange for Sub-Saharan Africa.

In 2023, remittances to the region were nearly 1.5 times the size of foreign investment flows, which stood at US$38.6 billion.

Ghana’s dependence on remittances has become increasingly evident. These inflows not only support the current account but also provide a buffer against various economic shocks. For many Ghanaians, remittances from family members abroad represent a critical source of income.

Recent efforts by the Central Bank of Nigeria to unify the foreign exchange market and introduce new operational modalities for financial institutions have implications for Ghana.

These regulatory changes aim to increase competition and reduce transaction costs, potentially benefiting Ghanaians receiving remittances from Nigeria.

However, the high cost of remittances remains a concern. In Sub-Saharan Africa, senders paid an average of 7.9% to send US$200 in the 2023 final quarter, up from 7.4% in the 2022 final quarter.

Ghanaians in US face new immigration restrictions

Ghanaians living in the US have been dealing with a new immigration rule introduced by the Trump administration.

Since April 11, all foreign nationals are required to register and always carry proof of their legal status.

Everyone considered a foreign national must have proof of their legal status, such as a Green Card, visa documents, or the I-94 entry record, with them at all times.

Trump notably promised to crack down on immigration during his presidential campaign.

All foreign nationals present in the US longer than 30 days were to have registered under the Alien Registration Act by April 11, according to a notice from the US Department of Homeland Security.

Ghanaians abandon US Church of Pentecost branch

YEN.com.gh reported in February that a Church of Pentecost branch in the US was abandoned by some of its Ghanaian members who feared being deported amid a crackdown by the Trump administration.

The district pastor of the Church of Pentecost USA Inc., North Columbus, Samuel Koomson, said that around half of his congregation was now staying home.

Aside from religious activities, the fear of deportation has also spread to educational spaces, with many concerned by the ongoing crackdown on immigrants.

Proofreading by Samuel Gitonga, copy editor at YEN.com.gh.

Source: YEN.com.gh