A recent legislative proposals in the United States could impact remittances sent by the Kenyan diaspora, particularly those residing in the U.S.
These proposals are part of broader immigration and fiscal policy changes introduced by former President Donald Trump, who returned to office in January 2025.
Proposed U.S. Legislation on Remittances
A key proposal, known as “The One Big Beautiful Bill,” seeks to impose a 5% tax on all remittances sent abroad by non-citizens, including green card holders and visa holders.
This legislation aims to generate revenue by targeting the billions sent abroad annually by migrant workers, which bolster the economies of recipient countries.
Critics argue that such a move could harm vulnerable communities, reduce economic opportunities abroad, and unintentionally drive more migration.
Additionally, President Trump has proposed halting remittances sent by undocumented immigrants, further tightening policies affecting financial transfers to countries like Kenya.
Impact on Kenya and the Diaspora
Kenya is the largest recipient of remittances from the U.S., with diaspora inflows reaching an all-time high of US$4.95 billion in 2024, accounting for 51% of total remittances. These funds are crucial for supporting families, funding education, and investing in local businesses.
However, recent data indicates a decline in remittances from the U.S., with a 2.2% drop in the first quarter of 2025 compared to the same period in 2024.
This reduction is attributed to restrictive immigration policies and economic uncertainties stemming from the Trump administration’s return to power.
Kenyan Government’s Response
In response to concerns about double taxation, the Kenyan government has initiated a review of tax laws related to diaspora remittances.
President William Ruto announced that the National Treasury, Kenya Revenue Authority (KRA), and the State Department for Diaspora Affairs are conducting a comprehensive review to address the issue and ensure fair taxation practices for Kenyans abroad.
Conclusion
The proposed U.S. remittance tax and other restrictive policies could significantly impact the Kenyan diaspora’s ability to support their families and contribute to Kenya’s economy.
While the Kenyan government is taking steps to address taxation concerns domestically, the broader international policy environment remains a critical factor in sustaining these vital financial flows.
