The Israel Tax Authority with an Urgent Request
Two days after the stormy debate in the Constitution, Law and Justice Committee of the Knesset, demands were raised by various Knesset members to postpone the entry into force of the Law on the Reduction of Cash Use, and a few days before the law came into force, calls to stop the law join one of the most prominent law firms in the economy: Pyron and Co. appealed to the Ministry of Finance and the Tax Authority on Tuesday to “immediately freeze the campaign” of the Law on the Reduction of Cash Use and to postpone the implementation of the law. They claim that in view of “a serious flaw in the public information campaign, which must have been done inadvertently, it not only guides the public towards the implementation of the law, but may even mislead it in the way it is applied.”
The letter refers to the campaign launched by the Tax Authority a week and a half ago. This is an information campaign in the various media, general and sectoral, under the slogan “You have violated the cash law – you paid dearly.” Its purpose is to present to the public the law to reduce the use of cash.
According to the ministry, while the campaign launched by the Tax Authority last week warns the public against paying cash.
According to the information presented in the campaign, he may understand that in a deal of NIS 20,000, he is allowed to pay “businesses” up to NIS 11,000 in cash (and the credit balance), which is certainly not true. Doing so may fail in a criminal offense. ”
The law – a dramatic change in consumption habits
The reduction in the use of cash is one of the dramatic changes expected to occur in 2019. The law, due to take effect on January 1, limits the ability of the general public to use cash above a certain ceiling, and is supposed to change the consumption habits of all of us in the sense that it is trying to encourage the public to switch to digital means of payment.
The law sets a limit on the use of cash in any transaction worth more than NIS 11,000 per dealer or NIS 50,000 for private individuals. The law also stipulates a hierarchy of financial sanctions for the dealer and criminal penalties for non-dealers, instead of a 30% penalty for the first violation. The sanction shall apply only to the amount paid in cash when relatives are excluded from the law.
According to Adv. Katsav and Ofek, as of today, the Tax Authority’s campaign on television and radio warns the public of: paying cash in excess of NIS 50,000 to private individuals, and paying cash in excess of NIS 11,000 to businesses. Explicitly contradicts the provisions of the law, which prohibit (or allow) payment in cash as a result of the total transaction amount, and there is no prohibition or permit to pay in cash any amount, regardless of the total transaction amount.
“Therefore,” the lawyers write to the finance minister, “anyone who wants to finance his steps according to the information given in the campaign, on behalf of anyone who is expected to be authorized to provide such information, is likely to understand that ostensibly in a transaction of NIS 20,000 (for example) To pay “businesses” up to NIS 11,000 in cash (and the credit balance), and “private individuals” can pay in cash not to exceed NIS 50,000 (also in a transaction totaling NIS 100,000) – which is clearly incorrect (since, as stated, is Depending on the amount of the total transaction.) Therefore, the practice may fail in a criminal offense ”
Or to at least postpone it for a few months, since the applicants claim that most of the public is not aware of the “decrees” imposed on it, and does not know the alternative electronic means that are supposed to replace the use of cash. Those who criticize the move claim that it will harm the weaker populations in the country, will place great difficulties on holders of limited accounts in banks, on undeveloped populations with new technologies that are foreign and difficult for them, and on the population that does not hold bank accounts.
Among other things, at a meeting held by the Knesset Constitution Committee this week, committee chairman MK Nissan Slominski presented a bill that postpones the application of the law by six months. Alternatively, Slominski proposed, it would be possible to avoid passing the law to the extent that the Tax Authority agrees that during the first 9 months of the law’s application, that is, by September 30, 2018, no sanctions will be imposed against those who violated the law. The current law has already determined that during the first nine months of its application, whoever is caught for the first time makes a cash transaction in violation of the law – will receive a warning only and not a fine.
Eran Yaakov, the director of the Tax Authority, received harsh complaints from Knesset members and representatives who were in the discussion, but insisted that the law should be implemented from January this year, and clarified that “we are ready and we can begin with the implementation of the law.”
Last month, attorney Uri Goldman, who specializes in the areas of tax and money laundering, also appealed to the Finance Minister to stop the law from being implemented, claiming that beyond the fact that the law is changing the world order, The Tax Authority by the Constitution Committee to do public campaigns and bring the law to the attention of the public weeks before its application – but it did not do so in time.
In addition, Goldman claimed that according to the Bank of Israel’s currency department, NIS 76 billion in cash flows in the economy, and “since the public did not know about the law, it was not prepared accordingly, inter alia, did not put the money in the bank, Times left “.
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The Tax Authority said in response: “In light of comments made during the discussion in the Knesset Constitution, Law and Justice Committee, and in order to create clarity in the matter, the Authority makes adjustments to the advertising formulas so that the provisions of the law will be clear that in every transaction with businesses, the amount allowed in cash will not exceed NIS 11,000 Upper limit) and in a transaction with private individuals, for NIS 50,000 (upper limit).
“In any case, the campaign is intended to raise awareness of the law and refer to the authority’s website, which clearly states the cash payment permitted by law, and provides a period of nine months for the public to study and study the law