Article Israel: Rules Decreasing Limits on Permissible Cash Transactions Enter into Effect

New rules issued by the Israel Tax Authority (ITA) decreasing the ceilings for cash permitted for use in transactions went into effect on August 1, 2022. The ceiling categories were established under the Reduction of Use of Cash Law, 5778 – 2018. This is the second decrease in the three and a half years since the law was adopted.

Objectives of the Law

The Guide to Reducing the Use of Cash issued by the ITA describes the objectives of the law and provides details on its implementation (abbreviated version available in English). According to the guide, a committee established to examine the use of cash in Israel concluded that as of July 2014, about one-fifth of Israel’s economic activity was being carried out with the use of “black money” that could not be traced and whose users could not be identified because it was in cash. The committee recommended a gradual reduction of the use of cash and other paper-based payment methods, while promoting and increasing the use of electronic means of payment. To further this goal, the law intended “to circumvent the use of ‘black money’ and assist in the fight against criminal activity, including serious crimes, tax evasion, money laundering and terrorist financing.”

Content of the Rules

The new rules establish the restrictions on the use of cash for “dealers,” “persons who are not dealers,” tourists, certified public accounts (CPAs), and attorneys who provide a “business service” to a customer. For purposes of enforcement, a “dealer” is defined as a “person who sells an asset or provides a service during the course of his business, including a nonprofit organization.” A “person who is not a dealer” is defined as including “a dealer not it the course of his business.”

As of August 1, 2022, the threshold for the use of cash was reduced as follows:

  • For dealers: from 11,000 Israeli new shekels (ILS) (about US$3,225) to ILS 6,000 (about US$1,760).
  • For tourists: ILS 55,000 (about US$16,125) to ILS 40,000 (about US$11,725).
  • For wages, donations, or loans: ILS 11,000 (about US$3,225) to ILS 6,000 (about US$1,760), except for loans granted by a supervised financial entity.
  • For gifts in cash: ILS 50,000 (about US$14,660) to ILS 15,000 (about US$4,400).

The new rules similarly restrict the payment in cash from a dealer to an attorney and a CPA for “a business service” to ILS 6,000 (about US$1,760) and from a person who is not a dealer for any business service to ILS 15,000 (about US$4,400). A business service is defined as buying, selling, or long-term leasing of real estate, or buying or selling a business.

The new rules require dealers to record the method of payment received. They also prohibit payment by check in respect of transactions, salaries, donations, loans, or gifts without the name of the payee as the payee or endorsee noted on the check. In addition, an endorsee must not endorse a check and or receive an endorsed check if the check does not contain the name and identity number of the endorsing party. Identity cards are issued to all Israeli residents 16 years of age or older in accordance with the Population Registry Law, 5725-1965, as amended.

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Chicago citation style:

Israel: Rules Decreasing Limits on Permissible Cash Transactions Enter into Effect. 2022. Web Page. https://www.loc.gov/item/global-legal-monitor/2022-08-31/israel-rules-decreasing-limits-on-permissible-cash-transactions-enter-into-effect/.

APA citation style:

(2022) Israel: Rules Decreasing Limits on Permissible Cash Transactions Enter into Effect. [Web Page] Retrieved from the Library of Congress, https://www.loc.gov/item/global-legal-monitor/2022-08-31/israel-rules-decreasing-limits-on-permissible-cash-transactions-enter-into-effect/.

MLA citation style:

Israel: Rules Decreasing Limits on Permissible Cash Transactions Enter into Effect. 2022. Web Page. Retrieved from the Library of Congress, <www.loc.gov/item/global-legal-monitor/2022-08-31/israel-rules-decreasing-limits-on-permissible-cash-transactions-enter-into-effect/>.