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  • Writer's pictureשוהם שאוליאן, רו״ח (עו״ד)

The Reduction Of Use Of Cash Law

Two silhouetted figures, one hooded and one bald, engaged in an exchange of cards under a stark light in a dimly lit room, with the shadow of a window grille cast on the wall behind them, creating a dramatic and mysterious atmosphere.

In recent years, the Israeli Tax Authority (ITA) has imposed strict restrictions on cash transactions. This move, which is part of a broader campaign that began in January 2019, is designed to fight tax evasion, reduce the activities of the "black money", and move the State of Israel towards a digital economy.


Since the beginning of the Reduction Of Use Of Cash Law in 2019, the ITA has seen significant progress in the fight against 'under-the-table' transactions. With fines totaling about 5 billion shekels, thousands of businesses and citizens have faced penalties for non-compliance, proving the authorities' strong commitment to this initiative.


Under this law, restrictions were placed on the public's ability to use cash above a certain threshold, and from August 1, 2022, these limits were further reduced:


For businesses: They may not take any payment in cash in any transaction in the course of their business, when the transaction price exceeds NIS 6,000 (previously NIS 11,000).


For private individuals: They may not take any payment in cash t, when the transaction price exceeds NIS 15,000 (previously NIS 50,000).

 

The law exempts from its scope some charitable donations and cash gifts, and does not apply to transfers between family members, except for cash payments to a family member for wages.


Violating this law will result in increased fines based on the amount exceeding the limit, ranging from 15% to 30% for businesses and 10% to 25% for individuals. It should be noted that splitting payments to circumvent the law is a criminal offense, with the potential for imprisonment.


These regulated limitations are part of a strategic plan to transition to digital payment methods, thereby increasing transparency and reducing the frequency of unreported transactions. However, the ITA does not stop here. Future plans include limiting cash holdings at home or in businesses to 200,000 NIS, but political and legislative challenges may delay these proposals.

 

 

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