Jerusalem, Aug 2 (IANS): An Israeli law that goes into effect on Monday limits cash payments in one business transaction to 6,000 new shekels ($1,785), as the country works to combat organised crime, money laundering and tax evasion.
The law, which was introduced by the Israel Tax Authority last week, requires that any payment to a business over 6,000 shekels must be made through other means such as digital transfer or a debit card. Individuals who are not listed as business owners can use up to 15,000 shekels in cash when it comes to trading, Xinhua news agency reported.
Previously, the maximum amount of cash that can be used in one business transaction is 11,000 shekels.
According to a statement issued by the Israel Tax Authority, restrictions on cash use do not apply to money transfers between family members, with the exception of rent payments for which the maximum amount has been reduced from 50,000 shekels to 15,000 shekels.
Analysts believe the law will compel people to pay with digital methods rather than cash so that transactions can be easily tracked. Cash payment limitations are intended to rein in tax evasion, black market activity, and even terrorist operations.
Uri Goldman, an expert in international taxation, economic crime, and money laundering prohibition, told Israeli media that the law primarily impacts people such as plumbers and handymen, as well as small landlords.
The lowering of the cash payment ceiling "would have a significant impact on those who sells products like electrical goods and furniture," he said.
Heavy fines are imposed for violators of the law, starting at 15 per cent of the cash payments of fewer than 25,000 shekels, rising to 20 per cent for payments of 25,000 to 50,000 shekels, and reaching 30 per cent for bigger payments, according to the Israel Tax Authority.
The ultra-Orthodox Jewish charitable funds that give and receive money in cash are exempt from the law. The enforcement of the law is currently not applicable to non-Israelis in the West Bank and the Gaza Strip and Israeli citizens who give or receive cash to or from non-Israeli residents in the two regions.