Bangladesh, others countries to pay 1pc tax on cash remittances from US

Sending remittances (earnings from abroad) from the United States to Bangladesh or any other country in the world via cash transactions will now incur an additional 1 dollar tax per 100 dollars.

This new federal excise tax has been effective since the first day of this year, 1 January.

Experts say the impact will be greatest on undocumented immigrants without bank accounts and low-income expatriates.

The tax has been imposed as part of the One Big Beautiful Bill Act 2025, signed by President Donald Trump, formally called the Excise Tax on Remittance Transfer. The bill, passed by Congress in May last year, was signed by Trump on 4 July, the US Independence Day.

According to the law, this 1 per cent tax applies only to remittances sent through cash, money orders, cashier’s checks, or similar physical methods. No additional tax applies if money is sent via bank accounts, debit cards, or digital methods (such as online transfers).

Zohaib Chowdhury, a US expatriate who regularly sends money to Bangladesh, told Prothom Alo: “Everything in the US is taxed. Now remittances too. This makes me slightly reluctant to send money to Bangladesh. If the Bangladesh government increases incentives, it would help expatriates.”

Aseem Kumar, a manager at a store in New York who works as an agent for several government-approved money transfer companies, said: “No tax applies if money is sent via a US bank card or bank account. This extra charge applies only for cash transactions.”

Mohammad Malek, CEO of Standard Express, said this is a law of the US government and must be followed. Until July last year, the US ranked first in sending remittances to Bangladesh, but now it has fallen to fifth. However, this additional tax may encourage some to send money through illegal channels.

The Bangladesh government and Bangladesh Bank may increase monitoring and boost incentives to encourage sending remittances via legal channels.

Economists say that besides Bangladesh, countries dependent on expatriate earnings such as Mexico, India, and the Philippines will also be affected by this tax.