Law For The Reduction Of Cash Use Introduced

Author:Mr Ron Sitton
Profession:Fischer Behar Chen Well Orion & Co
 
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Introduction

On 18 March 2018 Parliament enacted the Law for the Reduction of Cash Use (5778/2018), which came into force on 1 January 2019.

The law imposes certain restrictions on the use of cash and cheques that do not name the payee. It aims to reduce cash transactions in an effort to fight financial crime and money laundering and foster the use of more modern and efficient payment methods.

The law distinguishes between transactions to which a business selling products or providing services in the ordinary course of its business is party and transactions between private parties.

Violation of the law may constitute a criminal offence, resulting in financial penalties and imprisonment.

Restriction on use of cash

The Law for the Reduction of Cash Use has introduced the following thresholds on cash transactions:

NIS11,000 for businesses; and NIS50,000 for private persons. Where the value of a transaction is greater than the above thresholds, the cash portion thereof cannot exceed 10% of the transaction value (up to the above thresholds). For example, the purchase of a product from a business (eg, a store) for NIS10,000 may be made in cash; however, payment for a NIS12,000 product purchased from a business may include only a cash portion of up to NIS1,200 (ie, 10% of NIS12,000).

The transaction value is the gross value (including value added tax). The prohibition on cash payments also applies to salaries, donations and loans, as well as gifts in excess of NIS50,000.

The above restrictions do not apply to cash payments between family relatives (except for salaries) or the...

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