According to the law, in transactions exceeding NIS 11,000 between a customer and a business, customers may only pay 10% of the value of the transaction in cash or NIS 11,000, whichever is less.
By EYTAN HALONUpdated: JANUARY 4, 2019 00:55Stacks of Israeli shekel notes [Illustrative](photo credit: NIR ELIAS / REUTERS)Seeking to tackle Israel’s large shadow economy and fight financial crime, the Law Limiting the Use of Cash took effect on January 1, bringing significant changes in executing financial transactions.The law, passed in March 2018 on the basis of recommendations made by the Locker Committee, limits both the use of cash and checks, and affects businesses, private individuals, tourists, certified public accountants and attorneys providing “business services” to clients.“Due to the fact that cash is anonymous, and it is not possible to identify its users, this makes it possible to easily carry out commercial and financial activity far from the eyes of the authorities,” the Israel Tax Authority said ahead of the enactment of the legislation.Recognizing this, the committee therefore recommended the implementation of a framework for the gradual reduction of the use of cash, while simultaneously promoting and increasing the use of electronic means of payment.Both sides of a transaction - not just the service provider - are responsible for upholding the new regulations.According to the law, in transactions exceeding NIS 11,000 between a customer and a business, customers may only pay 10% of the value of the transaction in cash or NIS 11,000, whichever is less. Therefore, only NIS 11,000 can be paid in cash for any such transaction exceeding NIS 110,000. Tourists are limited to paying businesses NIS 55,000 in cash.In transactions above NIS 50,000 between private individuals, parties are permitted to pay only 10% of the value of the transaction in cash or NIS 50,000, whichever is less.Open, or uncrossed checks are forbidden, except for deals not exceeding NIS 5,000 between private individuals.Finally, it is only permitted to transfer a check on condition that the name and ID number of the endorser is written on the back. Checks worth in excess of NIS 10,000 may only be transferred on one occasion.The law states that violators will be subject to a financial sanction or administrative fine in accordance with the severity of the violation, or even imprisonment in the case of fraud.
Until September 30, however, no sanctions or fines will be imposed, unless the violator has violated the relevant provision and also received a written warning.According to a 2010 World Bank report, Israel’s shadow economy was estimated to be worth approximately 22% of gross domestic product (GDP).Assuming that figure remains true today, with Israeli GDP worth $350.9 billion in 2017, the country’s shadow economy would currently be valued at approximately $77 billion.
![Stacks of Israeli shekel notes [Illustrative] (photo credit: NIR ELIAS / REUTERS)](https://images.jpost.com/image/upload/q_auto/c_fill,g_faces:center,h_537,w_822/426779 "Stacks of Israeli shekel notes [Illustrative]")