US president Donald Trump’s proposal to impose a 5 per cent tax on remittances sent by immigrants — including green card holders and H-1B visa holders — has raised concerns in Bangladesh, with economists warning of a potential decline in remittance inflows and a rise in informal money transfers.
The tax, part of the proposed One Big Beautiful Bill Act recently approved by the US House Budget Committee, would apply to all immigrants except US citizens.
It includes no minimum threshold, meaning even small remittance amounts would be taxed. The bill passed the House of Representatives on Sunday and is now headed to the Senate for consideration.
Experts say the policy could have implications for Bangladesh’s economy, where remittances are a vital source of foreign currency that does not come with repayment obligations.
Any disruption in this flow could directly affect the country’s foreign exchange reserves and overall macroeconomic stability.
According to data from Bangladesh Bank, the United States is currently the single largest source of remittances for Bangladesh.
In April 2024 alone, Bangladeshi expatriates in the US sent $330 million.
For the first ten months of the 2024–25 fiscal year (July to April), total remittances from the US amounted to $4.2 billion or Tk 52,026 crore — over 17 per cent of Bangladesh’s total remittance earnings.
A 5 per cent tax on this sum would mean an estimated $218 million or over Tk 2,660 crore in additional costs for Bangladeshi remitters.
Mustafizur Rahman, Distinguished Fellow at the Centre for Policy Dialogue (CPD), told ¶¶Òõ¾«Æ· that the proposed tax would increase the cost burden on Bangladeshi expatriates and their families.
‘This is bad news for both the senders and the receivers,’ he said.
Combined with existing transfer fees, this new tax could discourage remittances through official channels,’ he said.
‘The likely outcome is a shift toward informal money transfers, which would hurt both remittance transparency and the country’s reserves, he said.
BB officials said that global remittance patterns have shifted significantly in recent years. Large money transfer operators such as Master Card, Western Union and MoneyGram now aggregate remittances by collecting small amounts from various countries and sending them from a single source country. This structural shift has led to a sudden rise in remittances from the US to Bangladesh over the past year.
Bangladesh Bank spokesperson and executive director Arief Hossain Khan, however, downplayed the potential impact.
He argued that the new tax may not significantly reduce overall remittance earnings due to the evolving aggregation system in global transfers.
Zahid Hussain, former lead economist at the World Bank’s Dhaka office, said it is difficult to precisely estimate the extent of potential losses from the proposed tax, as a significant portion of remittances reported from the US is actually aggregated from other countries.
However, he noted that the policy would inevitably have some impact on overall remittance earnings.
‘It will also likely to push many expatriates to shift toward informal channels for sending money, bypassing the formal banking system,’ he added.
