At a regular plenary session, the Senate of the Oliy Majlis approved the Law “On Amendments and Additions to Certain Legislative Acts of the Republic of Uzbekistan Aimed at Introducing Islamic Banking Activities in Uzbekistan.” The decision marks an important step in expanding the country’s financial system.
Lawmakers noted that Uzbekistan has been carrying out systematic reforms in recent years to modernize the banking sector by adopting international best practices and introducing new financial services. The law was developed in response to growing demand for broader financial inclusion and alternative banking products, particularly Islamic finance.
The legislation introduces amendments to two codes and seven existing laws and establishes a specific licensing framework for Islamic banking activities. Under this framework, banks will be allowed to operate either as fully fledged Islamic banks or under a dual model that offers both conventional and Islamic banking services.
To coordinate and oversee Islamic finance activities, the law provides for the establishment of Islamic finance councils within the Central Bank and within banks that engage in Islamic banking operations. These councils will help ensure compliance with Islamic finance principles.
In addition, the law introduces a separate chapter into the Tax Code to address the unique characteristics of Islamic financial transactions. Under the new provisions, income from Islamic finance operations will be treated as equivalent to interest income for tax purposes, while markups applied by banks and microfinance organizations on goods sold to clients will be exempt from value-added tax.
Senators emphasized that the adoption of the law is expected to expand access to financial services for the population and entrepreneurs, strengthen competition in the banking sector, and attract new strategic investors to Uzbekistan’s financial market.