The original online payment platform, PayPal, has decided to leave the populous island of Puerto Rico next month. The country has imposed a 2 percent take on any money transmission, forcing Paypal’s hand. So what does this mean for those who need to send money from Puerto Rico?
Puerto Rico Begins Capital Controls
When a country’s economy or currency is struggling or on the brink of collapse, the citizens start to move money out of the nation to protect their savings from the devaluation. Nine times out of ten, the economic downturn is caused by poor governance and economic policy, not the citizens. Therefore, the people would rather invest their money in appreciating assets, not poor leadership and economic decline.
Greece, Argentina, the United States (Foreign Account Tax Compliance Act, or FATCA) and now Puerto Rico have recently used legislation to force capital controls on citizens, or even people living and working overseas.
Puerto Rico passed a law, originating from House Bill 2191 last December, wherein all peer-to-peer transactions are now taxable at a 2% rate. PayPal had the following response:
“Due to new government policies in Puerto Rico, we have made the difficult decision to no