(Washington, D.C.) – A proposed U.S. law backed by President Donald Trump’s administration could see Kenyans living and working in the United States lose a significant portion of the money they send home to support their families and communities.
The draft legislation, introduced by Republican lawmakers under a package called the “One Big Beautiful Bill,” proposes a 5% excise tax on all international money transfers made by immigrants in the U.S., including those with green cards and temporary work visas. U.S. citizens would be exempt from the tax.
This new measure, if passed, could reduce the funds flowing to Kenya from its diaspora in the U.S., which remains the largest source of foreign remittances to the East African country. In 2024 alone, Kenyans in the U.S. sent home $2.63 billion (approximately KSh339.17 billion), representing more than half—53.17%—of Kenya’s total remittances of $4.945 billion.
If the 5% tax is enacted, an estimated $131.46 million (around KSh16.96 billion) would be collected from money sent to Kenya alone, raising concerns among diaspora communities, tax experts, and development advocates.
According to the proposed legislation, “There is hereby imposed on any remittance transfer a tax equal to 5.0 percent of the amount of such transfer.” The bill specifies that banks and financial service providers would be responsible for collecting the tax at the point of transaction.
Critics argue that the tax would raise the cost of sending money abroad, disproportionately affecting immigrant communities. The Kenya Diaspora Alliance (KDA), a key organization representing Kenyans living overseas, has voiced strong opposition.
“It is unfortunate and discriminatory. I haven’t heard anywhere where this happens,” said Dr. Shem Ochuodho, Global Chairman of KDA and President of the Africa Diaspora Alliance. He added that such a policy would undermine international agreements aimed at making it easier and cheaper for migrants to send money back home.
Dr. Ochuodho pointed to the United Nations Global Compact for Migration, specifically Objectives 19 and 20. These call for creating better conditions for diaspora to contribute to development and for promoting faster, safer, and cheaper remittance services. The proposed tax, he argued, directly contradicts those objectives.
Tax professionals have also questioned the rationale behind the proposal. Hadijah Nannyomo, a tax expert with Ernst & Young (EY), criticized the draft bill for taxing the entire amount of money transferred rather than the service or transaction fee. “It does not seem to go with the economic principle of taxation,” she said. “You are literally taking money as if it were a good, yet it is the service that should be taxed.”
Nannyomo warned that the law could encourage informal or alternative transfer routes, such as using U.S. citizens as intermediaries to avoid the tax, potentially creating loopholes and encouraging non-transparent financial practices.
The proposed law is expected to be tabled for a vote in the U.S. House of Representatives by the end of this month, with potential enforcement starting as early as July.
For Kenya, diaspora remittances are a critical source of foreign currency. The Central Bank of Kenya (CBK) has previously noted that money from the diaspora helps stabilize the Kenyan shilling by increasing the supply of dollars. These funds also play an essential role in household welfare, often going toward school fees, medical expenses, food, and other necessities.
A 2021 CBK survey found that the majority of remittances from abroad support family members directly, making any additional cost burdens particularly harmful to low-income recipients.