Russia’s government is seeking to combat the shadow economy by imposing new limits on cash transactions.

Officials at both the Ministry of Economic Development and the Ministry of Finance are looking at ways to legitimize the Russian economy, where over-the-counter ‘unofficial’ commerce is a recurring problem.

Imposing limits on cash purchases and creating different VAT thresholds based on payment the method used are under consideration. A ban on cash salary payments which is a common practice in Russia but also a major source of income tax evasion is also up for discussion.

The Russian newspaper Vedomosti states that lawmakers are looking to India and Azerbaijan as a source of inspiration for taxing cash but still in principle “do not know how to it” effectively.

Both the aforementioned countries give tax reductions to purchases made by card.

While Russia is no longer a largely cash-based economy, the government is far from alone in wanting to cut down on its use. Several countries worldwide - India a notable example - have commenced a so-called “war on cash” by withdrawing banknotes and advocating new payment methods.

At the same time, Russia’s central bank recently reiterated a lack of desire to ban cryptocurrency use, instead of saying suitable regulations should be applied. Prior to the apparent U-turn in December, non-ruble currencies were unofficially outlawed.