The United States is going to impose a "remittance tax."
The "Big Beautiful" bill passed by the Trump administration in the United States plans to impose a 3.5% tax on international transfers to non-U.S. citizens starting January 1, 2026. This policy could have a significant impact on the economies of emerging market countries that rely on remittances, particularly in countries like India and the Philippines. Although China is the third-largest remittance-receiving country, its impact on GDP is relatively small. Barclays noted that the timing and final form of the bill's implementation are still uncertain, and therefore it has not been included in the baseline forecast
The "Big Beautiful" bill of the Trump administration in the United States has attracted global attention after being passed by Congress.
The bill plans to impose a 3.5% tax on all international transfers (including remittances, investment income transfers, etc.) for non-U.S. citizens starting from January 1, 2026. Although this tax rate is lower than the initial draft's 5%, it could still have a significant impact on the economies of emerging market countries that rely on remittance inflows.
According to World Bank data, the total remittances received in the Asia-Pacific region in 2023 are approximately $315 billion. Among them, India and the Philippines are the countries with the largest absolute remittance inflows, while countries like the Philippines, Pakistan, Sri Lanka, Vietnam, Bangladesh, and India have a high proportion of remittances to GDP, indicating a high dependence on foreign remittances.
It is worth noting that although the proportion of GDP is negligible, China is the third-largest remittance-receiving country.
Barclays believes that although the bill has passed the House of Representatives, its implementation timeline and final form remain uncertain, and therefore it has not been included in the baseline forecast.
