More
    HomeGovernance, Policy & Regulations ForumPolicy & Regulations ForumUS Crackdown Targets African Remote Workers in American Tech

    US Crackdown Targets African Remote Workers in American Tech

    Published on

    spot_img

    A new bill introduced in the US Senate is threatening to send a chill through the global remote work economy, with a proposal to slap a hefty tax on American companies that hire foreign workers — a move that could fundamentally alter the financial calculus for startups relying on African tech talent or from other emerging markets.

    Dubbed the Halting International Relocation of Employment (HIRE) Act, the legislation, introduced by Senator Bernie Moreno (R-Ohio), proposes a 25% excise tax on any payment a US company makes to a foreign person for services that benefit American consumers.

    In short, that remote senior developer in Lagos just got 25% more expensive for a San Francisco-based startup. And to add a little extra spice, the bill would also make those payments non-deductible as a business expense.

    The proposal is the latest shot across the bow of the globalist consensus that has allowed tech to build distributed teams, tapping into talent pools from Nairobi to Cairo. The bill’s language is a masterclass in populist grievance, targeting what its sponsor calls the practice of “shipping good-paying jobs overseas in pursuit of slave wages and immense profits.”

    “If companies want to hire foreign workers instead of Americans, my bill will hit them where it hurts: their pocketbooks,” Senator Moreno said in a statement.

    How the Math Gets Ugly

    The HIRE Act’s mechanics are brutally simple. It defines an “outsourcing payment” as any fee or service charge paid to a foreign person for labour that benefits US consumers. On every such payment, the US company would be required to pay a 25% tax.

    The revenue generated would be funnelled into a new “Domestic Workforce Fund” to support apprenticeship and retraining programmes in the US — a plan to, in effect, make companies that outsource pay to train their domestic replacements.

    For a US startup that has embraced the remote-first model to manage burn rates and access a wider talent pool, the financial implications are stark. A software engineer in Accra being paid $70,000 a year would suddenly come with an additional $17,500 tax bill for their US employer. Compounded by the inability to deduct the original salary, the move would make hiring abroad significantly less attractive than hiring within the US, which is precisely the point.

    A Wider Political Chill

    While the HIRE Act is a long way from becoming law, it signals a hardening political mood in the US against the very model that has powered much of the tech world’s recent growth. It’s part of a broader protectionist trend where domestic politics are beginning to clash with the borderless nature of the digital economy.

    This isn’t an isolated thought bubble. The bill echoes the sentiment behind a recent, though now-softened, proposal in the US Congress to levy a tax on all international remittances. That measure, which initially proposed a 5% tax before being watered down, sent a wave of anxiety through Africa’s remittance-fintech scene, which handles a significant portion of the over $100bn sent to the continent annually.

    The logic is consistent: if capital or jobs are leaving the country, the government wants a cut.

    This legislative impulse isn’t exclusive to the West. In Tunisia, a new labour law passed in May, designed to protect workers by banning subcontracting for permanent roles, had the unintended consequence of forcing global HR giant Adecco Group to cease its operations. The law, aimed at preventing job insecurity, has instead made the flexible staffing models used by many tech companies unworkable, potentially stifling the very sector it hoped to support.

    Whether in Washington or Tunis, the message is becoming clearer: governments are growing wary of labour and capital models they can’t easily control or tax.

    For the thousands of African tech professionals who have built careers on the premise of a global talent market, and for the startups that hire them, the HIRE Act is a warning. The era of frictionless “work from anywhere” is running headlong into the much older reality of “vote from somewhere.” For now, it’s just a bill. But the political winds it represents are blowing stronger.

    Latest articles

    DigsConnect Founder Alexandria Procter Launches $1.4M Vehicle to Back African Startups

    Procter founded DigsConnect four years ago while she was an undergraduate student at the University of Cape Town..

    A 230-Angel Network, Beyond the ‘Big Four’: Inside Renew Capital’s Quiet Conquest of African VC

    While Nigeria saw the second-highest number of applicants to its Renew Venture Lab (350), it has no portfolio company there yet.

    Africa’s Payment Maze: Are New State-Backed Rails a Map or a Trap for Fintechs?

    In the last month alone, major economic blocs in East, Southern, and West Africa have launched ambitious interoperable platforms.

    How a Paper Fortune of $2.68m Vanished for a South African VC-Backed Fintech Founder

    Last year, TLcom Capital, together with Flourish Ventures, backed South African fintech LittleFish. However, that investment ended up in court, with one of LittleFish's founders fighting for his 'life' in the company post-deal.

    More like this

    DigsConnect Founder Alexandria Procter Launches $1.4M Vehicle to Back African Startups

    Procter founded DigsConnect four years ago while she was an undergraduate student at the University of Cape Town..

    A 230-Angel Network, Beyond the ‘Big Four’: Inside Renew Capital’s Quiet Conquest of African VC

    While Nigeria saw the second-highest number of applicants to its Renew Venture Lab (350), it has no portfolio company there yet.

    Africa’s Payment Maze: Are New State-Backed Rails a Map or a Trap for Fintechs?

    In the last month alone, major economic blocs in East, Southern, and West Africa have launched ambitious interoperable platforms.