As you may be aware, under the Law for the Reduction in Use of Cash, 2018 (the “Law” or the “Cash Law”) restrictions were placed on the use of cash (including foreign currency) and cheques, as part of the combat against crime, including serious crime, tax evasion, money laundering and terror financing.
We would request to turn your attention to a number of updates in this matter, including the entry into effect on August 1, 2022 of an order that reduces the maximum permitted amounts for cash payments, in the framework of the Law.
A. The Order to Reduce the Maximum Permitted Amounts for Cash Payments
Further to the decision of the government in August 2021 regarding the reduction in the use of cash, the Order for the Reduction in the Use of Cash (the “Order”) was published. The Order reduces the maximum permitted amounts for cash payments that were determined in the First Addendum to the Law, as of August 1, 2022. The reduction in the maximum amounts is, generally, as follows:
- A reduction from NIS 11,000 to NIS 6,000 – such that the maximum amount in cash that can be paid at a Dealer or by a Dealer for a transaction in the framework of its business, and the maximum amount in cash that can be paid or received in respect of a donation, loan or salary, will be NIS 6,000;
- A reduction from NIS 50,000 to NIS 15,000 – such that the maximum amount in cash that can be received for a transaction by a person who is not a Dealer, and the maximum amount in cash that can be paid for a transaction between two private individuals (except for the purchase of a vehicle by a private individual for which the maximum amount shall remain NIS 50,000), and the maximum amount in cash that can be given/received as present, will be NIS 15,000.
Please note that the above amounts are maximum amounts (“ceilings”). Accordingly, the maximum sum that can be actually paid in cash for a transaction, donation and other activities for which there are specific restrictions in the Law (as applicable), may differ (including lower) from those ceilings. Therefore, it is important to examine each case on its merits.
For your convenience, we set out below the maximum amounts for Dealers in connection with a transaction, that will apply as of August 1, 2022:
- If the Transaction Price (as defined in the Law) is up to NIS 6,000, the Dealer may receive/pay the amount in cash, in full.
- If the Transaction Price is greater than NIS 6,000, the Dealer may receive/pay in cash the lower of: 10% of the Transaction Price or NIS 6,000 (for example: if the Transaction Price is NIS 20,000 (including VAT), it can receive up to NIS 2,000 in cash, i.e. 10% of the Transaction Price and less than NIS 6,000).
- The maximum amount in cash in connection with a purchase transaction by a Tourist (as defined in the Law) from a Dealer was also updated, and accordingly:
- If the Transaction Price is up to NIS 40,000, the Dealer may accept full payment in cash from the Tourist (as opposed to the sum permitted prior to the entry into force of the Order, which was NIS 55,000); and
- If the Transaction Price is greater than NIS 40,000, the maximum amount that the Dealer may accept in cash from the Tourist is the lower of: NIS 40,000 (instead of NIS 55,000 as above-mentioned) or 10% of the Transaction Price.
In respect of payment or receipt of salary by a Dealer, as of August 1, 2022 – up to the amount of NIS 6,000 no restriction will apply (and the entire amount may be paid in cash). If the salary is above NIS 6,000, the salary, or any part thereof, may not be paid in cash.
It is noted that the Israel Tax Authority has created an anonymous simulator for the use of the public, for the calculation of the maximum permitted amount in cash.
For the simulator Click here (Hebrew).
B. Temporary Order in the matter of the Use of Cash for Transactions with Residents of the Area or the Palestinian Council (as defined in the Law) that are not Israeli Citizens
The Temporary Order in this matter was extended until December 31, 2022. Accordingly, the applicability of the restrictions on the use of cash provided in the Law will be delayed in respect of these residents and also in respect of Israeli citizens that give or receive payments in cash to/from such residents, with respect to giving/receiving such payments, up until January 1, 2023. It is noted that the making or receipt of a cash payment to/from such residents, where the payment is for a transaction above NIS 50,000 or where the making or receipt of the payment above that sum is as a donation, gift, loan or salary, requires Israeli citizens to make a report to the Israel Money Laundering and Terror Financing Prohibition Authority (in accordance with the instructions of the Law and the Prohibition of Money Laundering Law, 2000).
C. Sanctions for breaches
The Cash Law provides for monetary sanctions on Dealers and for criminal penalties in specific cases (such as fraud). The sanctions were expanded to include the possibility of an administrative fine for breaches of the Law by individuals, in the framework of the Administrative Offences Regulations (Administrative Fines – Reducing the Use of Cash) 2021.
For the publication of the Order (for reducing the ceilings of cash) and the Administrative Offences Regulations in the Official Gazette – Click here (Hebrew)
For the publication of the Extension of the Temporary Order as referred to above in the Official Gazette – Click here (Hebrew)