As of August 1, citizens of Israel can no longer use cash for transactions larger than 6,000 shekels (approx. $1,760) and 15,000 shekels (approx. $4,400), depending on the entity with which they are transacting. Instead, the use of digital payments will be encouraged.
The Israel Tax Authority passed legislation in March 2018 to avoid using “black money” and combat tax evasion, money laundering, and terrorist financing. Cash was recognized as the fuel of the shadow economy in Israel.
What exactly does the law say?
As per Israel’s leading law firm Herzog Law, using cash is prohibited in any transaction worth more than NIS 6,000 within a business and more than NIS 15,000 between private individuals.
These figures represent a decrease from the transaction limits set before. Business transactions were limited to 11,000 shekels ($3,220), while personal transactions were limited to 50,000 shekels ($14,660).
Tamar Bracha, the Israel Tax Authority’s official in charge of enforcing the rules, stated, “We want the public to reduce the use of cash. The goal is to reduce cash fluidity in the market, mainly because crime organizations tend to rely on cash. By limiting the use of it, criminal activity is much harder to carry out.”
Also Read: Central Bank of Israel & Hong Kong Test Cyber Secure CBDC
What are the exceptions to the ‘Cash Law’?
There are some exceptions to the new law, including charitable organizations and trade with Palestinians from the West Bank who are not Israeli citizens.
Deals involving large sums of money will be permitted in such cases, but they will necessitate a detailed report to the Israel Money Laundering and Terror Financing Prohibition Authority.
“The exemption for Palestinians applies until the end of 2022, for political reasons,” Adv. Uri Goldman, an expert in international taxation, economic crime, and money laundering prohibition, explains.
