Sheinbaum, Fintechs Slam US Plan for 5% Remittance Tax

Mexico’s President Claudia Sheinbaum, fintech leaders, and economic analysts have voiced concerns about a Republican-backed proposal in the US House of Representatives to impose a 5% tax on remittances sent abroad by migrants. The measure is part of a broader legislative package, The One, Big, Beautiful Bill, supported by President Donald Trump.

Sheinbaum denounced the proposal as “unacceptable,” arguing it amounts to double taxation on Mexican migrants who already pay taxes in the United States. “This is even unconstitutional in the United States, as Mexican men and women living there are already taxpayers,” she said during a press conference. She also highlighted that Mexico, the second-largest recipient of US remittances after India, would not be the only country affected, with several Latin American nations likely to suffer significant impacts.

Under the proposed law, the tax would be collected by money transfer providers and remitted quarterly to the US Treasury. Only US citizens verified by certified remittance providers would be exempt. Providers would also bear the financial burden for any unpaid taxes if not collected during the transaction.

In 2024, Mexico received US$64.7 billion in remittances, the highest in Latin America, according to Mexico’s Central Bank (Banxico). From January to April, remittances totaled S$14.27 billion—a 1.3% increase from the same period in 2023. Banxico data shows 99.1% of remittances were sent via electronic transfers, underscoring the growing reliance on digital platforms.

The proposal has already influenced market activity. Shares of Western Union, a major international money transfer provider, dropped 2.5% on US stock exchanges after the announcement.

Mexico’s fintech sector has also pushed back. Fintech México, an industry association, warned that the tax could harm millions of families, reduce financial transparency, and stifle innovation. “The increase in remittance costs will directly impact millions of households,” the group stated, describing the measure as “deeply regressive.”

The association raised concerns that higher costs might push users toward informal or cash-based channels, which would reduce financial oversight and transparency. “Informal channels create opacity and hinder governments’ ability to track financial resources,” the group warned. It also argued that designating authorized providers could limit competition and drive up consumer costs.

Fintech México emphasized the tax’s potential to stifle technological advancements like mobile wallets, blockchain platforms, and stablecoin-based payments. “This measure would undermine the development of safer, more efficient, and inclusive financial tools,” it said.

Mexican officials are engaging with representatives from other affected countries and urging US lawmakers to consider alternative solutions. “We are coordinating with representatives of other countries in the United States to present this as an unacceptable measure,” President Sheinbaum said.