Uzbekistan keeps dividend tax breaks until 2038
The Uzbek government is trying to make the country’s capital market more predictable for long-term investors by stretching existing tax incentives well into the next decade, Kursiv Uzbekistan reported.
Foreign companies receiving dividends would continue to benefit from a 5% profit-tax rate, the same preferential rate applied to local companies.
Positive foreign-exchange gains and interest on corporate bonds, including foreign currency bonds, would be exempt from tax until 2038 for both residents and non-residents, both individuals and companies. The exemption would also apply to income from sukuk, an instrument Uzbekistan is preparing to introduce as part of its thrust into Islamic finance.
«The proposal would exempt both individuals and companies — both residents and non-residents — from personal income tax and corporate profit tax until 2038 on interest income and foreign-exchange gains from corporate bonds, including bonds denominated in foreign currencies, as well as on income from sukuk securities,» Saulat Toreshov, a department head at the National Agency of Perspective Projects, told a press conference last Wednesday.
Another technical change that may be helpful to overseas investors is that transactions through omnibus accounts would not trigger tax where there is no change in the underlying beneficial owner of the securities. The package also suggests exemptions for investment funds and for some transactions used to structure sukuk and securitised bonds.
Why it matters for foreign investors
The bigger story is predictability. Uzbekistan’s regulator says extending the incentives to 2038 should give investors greater certainty when making long-term decisions and help deepen a market that remains small relative to the economy. Officials want investment through the domestic stock market to rise from a projected $841 million in 2026 to $1.68 billion by 2030.
The government has said it aims to draw at least $1bn into the local capital market, and plans for dual listings, foreign-currency bonds, depositary receipts and ETFs are set to expand. The level of capitalisation is still about 20% of GDP, so there is still room for growth.
Read more: Deposit boom in Uzbekistan: Drivers and prospects
For now, though, investors should treat 2038 as a proposal, not a promise. The incentives are in draft legislation and will only be definite once the final law is passed.
From economics and politics to business, technology and culture, Kursiv Uzbekistan brings you key news and in-depth analysis from Uzbekistan and around the world. To stay up to date and get the latest stories in real time, follow our Telegram channel.
