On March 27, 2026, the President of the Republic of Uzbekistan signed a law aimed at developing and introducing Islamic banking in the country.

In this alert, we have summarized what we consider to be the key changes to the current legislation related to the adoption of this law.
INTRODUCTION OF ISLAMIC BANKING

Law of the Republic of Uzbekistan No. ZRU-1126 ‘On Amendments to Certain Legislative Acts Aimed at Introducing Islamic Banking in Uzbekistan’ dated March 27, 2026 (the Law) provides for the introduction and legal regulation of Islamic banking.
In accordance with the amendments, the following are classified as Islamic finance transactions:
  • MUDARABA
    Financing on a profit-sharing basis
  • SALAM
    Financing through advance payment for goods
  • IJARA
    Leasing with a purchase option
  • MUSHARAKA
    Joint financing or financing through equity investments
  • MURABAHA
    Financing through installment sale of goods
  • WAKALA
    Raising funds through an agency agreement or investment deposits

Entities engaged in Islamic banking may also carry out other Islamic finance transactions that do not contradict the legislation and comply with Islamic finance standards.

REGULATION OF ISLAMIC BANKING


The Law provides for the introduction of a separate license granting the right to engage in Islamic banking, as well as the establishment of clear requirements for obtaining it from the Central Bank of the Republic of Uzbekistan (the CBU).


The license is perpetual and the transfer thereof, or transfer of any associated rights, to third parties is prohibited.

Banks holding a license to engage in Islamic banking are subject to an annual external audit to ensure compliance with Islamic finance standards.

The Law also provides for the establishment of the Islamic Finance Council under the CBU.


The CBU, as the main regulator, will approve Islamic finance standards and will be granted the authority to apply Islamic finance instruments to provide emergency liquidity support to Islamic banks.

Existing banks (already holding a banking license) may obtain an additional license to engage in Islamic banking.
As a result, a bank may operate under two licenses simultaneously
DEPOSITS

The Law allows Islamic banks to attract client funds without paying interest. Instead, other forms of income may be provided, or no income may be paid at all.

PERMITTED ACTIVITIES

According to the Law, Islamic banks may engage in the following without the restrictions applicable to other banks:
  • Trading
  • Establishment of legal entities
  • Equity investments
TAXATION OF ISLAMIC FINANCE TRANSACTIONS

The Law introduces amendments to the Tax Code of the Republic of Uzbekistan adding a separate chapter thereto to regulate specific taxation aspects of Islamic finance transactions. In addition, a special tax regime will apply to such transactions.
VALUE ADDED TAX

The following are exempt from VAT within the Islamic finance framework:
  • Transactions with Islamic securities
    (except for services related to their issuance)
  • Services of banks and MFOs under trust management agreements
  • Islamic finance leases
    (positive difference between lease payments and the purchase price)
  • Markup on goods,
    sold by banks and MFOs
Corporate income tax

The aggregate income from Islamic transactions consists of:

  • Income in the form of remuneration from Islamic finance transactions
  • Income of Islamic insurance or reinsurance organizations under insurance and reinsurance contracts

When calculating the CIT tax base, the following should be taken into account:

  • For interest-free loans and loans issued at a rate below the refinancing rate of the CBU within the framework of Islamic finance transactions, no income arises for the borrower.
  • Funds allocated to charitable purposes from penalties collected in connection with overdue payments under Islamic finance transactions are recognized as deductible expenses.
Other taxes
  • Personal income tax
    Individuals’ income from banks and MFOs under commission (agency) and trust management agreements is not subject to taxation.
  • Property tax
    Banks and MFOs that provide property under Islamic finance leases are recognized as property tax payers.
  • Land tax
    For land plots occupied by property transferred under Islamic finance leases, banks and MFOs (lessors) will be recognized as land tax payers.
TAX ACCOUNTING POLICY

The procedure for separate accounting for income derived from Islamic finance transactions and Islamic securities, in accordance with accounting legislation, must be reflected in the tax accounting policy.
AMENDMENTS TO CURRENT TAX DEFINITIONS
  • DIVIDENDS
    The term will also include income received by holders of Islamic securities (certificates) issued by banks and MFOs
  • INTEREST
    The term will also include income derived from Islamic finance transactions
  • SECURITIES
    The term will also include Islamic securities (certificates)
  • FINANCE LEASES
    The term will also include Islamic finance lease agreements concluded by banks and MFOs within the framework of Islamic finance transactions
HOW BEONE CAN HELP?

We would be pleased to assist in the following areas:

  • Consulting on the applicability of new legislative provisions to your company
  • Assessing the impact of legislative changes on your current business structures, including taxation of both existing and planned operations
  • Reviewing and updating your company’s tax accounting policy to reflect legislative changes
  • Preparing inquiries to regulatory authorities regarding the application of new legislative norms that may require clarification

We hope you find this information useful, and will be happy to give detailed advice on the changes and discuss them if you have any questions.

The Law will enter into force on June 29, 2026.

CONTACTS


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Address: 23 T. Shevchenko Street, Mirabad District, Tashkent, 100060, Republic of Uzbekistan
www.beone-uz.com