Capital Controls Have Arrived In Puerto Rico – PAYPAL PULLS OUT OF PUERTO RICO
by Louis Cammarosano, Smaulgld
PayPal to end payment service for monies coming from Puerto Rico on October 30.
Two percent tax levied by the Puerto Rican Legislature prompted the move.
Paypal announced to its U.S. customers via email today that it is ending its Puerto Rican service. The message read in part: “Person to person payments will not be made available for payments sent from Puerto Rico”
PayPal Puerto Rico
A two percent tax on person-to-person exchanges is now levied on transactions as per the Puerto Rican legislature via a bill passed in December 2014. According to sources, the two percent tax made it difficult for Paypal to continue to offer its services in Puerto Rico.
In a note to its Puerto Rican customers Paypal wrote:
“Due to new government policies in Puerto Rico, we have made the difficult decision to no longer offer our person-to-person payment service to our Puerto Rican customers as of November 1, 2015.
“Our customers in Puerto Rico will no longer be able send money to friends and family abroad with Venmo or PayPal, but will be able to continue to use PayPal to pay for goods and services and receive payments.
“We regret any inconvenience this may cause our valued customers in Puerto Rico.”
Capital Controls in Puerto Rico?
Paypal’s decision to suspend its service for Puerto Ricans wishing to send money from Puerto Rico to destinations abroad (including the mainland United States) acts as a de facto capital control that prevents money from leaving the island via person to person transactions.
The Puerto Rican Act that instituted the two percent tax states it as “necessary to establish recurring sources of income by imposing special charges on certain transactions carried outside and inside the jurisdiction of Puerto Rico..” “…it is in the public interest to impose charges on transactions originated in the local jurisdiction involving assets that no longer circulate in the local economy (emphasis added)…”
The statute would appear to cover money transmission alternatives like Bitcoin as the two percent charge applies to “every money transmission processed or completed electronically or by check, money order, fax(!), air transportation or other means (emphasis added) from the jurisdiction of Puerto Rico.
Such a tax is precisely the type of impetus that can boost bitcoin and alternative currency adoption.
Collecting that two percent on Bitcoin transactions originating in Puerto Rico may prove elusive.
This is a developing story, please check back for updates.