New legislation introducing tighter restrictions on large cash payments will come into force in Israel on Monday. The aim, as stated by the country’s Tax Agency, is to improve the fight against organized crime, money laundering and tax evasion. Critics doubt the law will succeed.
Israeli authorities go after cash purchases, introduce lower limits
Payments of large sums of money in cash and bank checks will be further restricted in Israel under the amendments that will come into effect on 1 August. Tax officials want to further reduce the circulation of cash money in the country, hoping to curb illegal activities such as illicit money laundering and tax evasion, the Jerusalem Post reported.
Under the new legislation, companies will have to use non-cash methods for any transaction that exceeds 6,000 shekels ($1,700), a marked decrease from the previous limit of 11,000 shekels ($3,200). The cash limit for individuals who are not registered as business owners will be 15,000 shekels (about $4,400).
Reducing the use of cash is the main goal of the law, according to Tamar Bracha, who enforces the rules on behalf of the Israel Tax Authority. Quoted by news outlet Media Line, the official elaborated:
The aim is to reduce the liquidity of cash in the market, mainly because criminal organizations tend to rely on cash. By limiting its use, criminal activity is much more difficult to carry out.
However, a lawyer representing clients in an appeal against the law filed in 2018, when it was first passed, insists the main problem is that the legislation is not efficient. Uri Goldman referred to data showing that since the initial introduction of the law, the amount of cash has increased. Pointing to another of its drawbacks, the legal expert further explained:
When the bill was passed there were more than a million citizens without bank accounts in Israel. The law would prevent them from doing any business and would practically turn 10% of the population into criminals.
An exemption for trade with West Bank Palestinians and charities active in ultra-Orthodox communities has also sparked controversy. In these cases, operations with large amounts of cash will be allowed, as long as they are thoroughly reported to the tax administration. Goldman believes this is unfair to the rest of society.
The Ministry of Finance also wants to limit private cash reserves
In its original draft, first proposed in 2015, the law also included a provision limiting private holding of large sums of cash to 50,000 shekels ($14,500). Although it was dropped at the time, Israel’s Finance Ministry now plans to reintroduce it and let parliament decide whether to adopt it after the next election.
Uri Goldman also believes that the authorities should at least allow people to declare their cash and deposit it in a bank account. This idea was also suggested during preliminary discussions of the legislation, but never passed. Otherwise, the cash will remain in circulation even if it is not used as before, he noted.
Meanwhile, the Bank of Israel has been exploring the option of issuing a digital shekel, another form of domestic fiat that is supposed to have cash-like characteristics. The majority of respondents in public consultations carried out by the monetary authority have supported the plan, the results published in May revealed.
Tags in this story
Prohibition, Cash, Israel, Israel, Law, Legislation, Limits, Money, Money Laundering, Payments, Restrictions, Shekel, Taxes, tax authority, tax evasion, Taxes, Taxes, transactions
Do you think the new law will limit the use of cash in Israel? Share your expectations in the comments section below.
Lubomir Tassev
Lubomir Tassev is a tech-savvy Eastern European journalist who likes Hitchens’ line: “Being a writer is what I am, rather than what I do.” In addition to crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.
Image credits: Shutterstock, Pixabay, Wiki Commons
Exemption from liability: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
More popular news
In case you missed it
[ad_2]
Source link
