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Banking

Uzbekistan Pitches Decades of Tax Breaks to Financial Firms

Uzbekistan is offering qualifying financial firms nearly half a century of tax exemptions to set up in Tashkent. The goal is to attract private capital into an economy where state-owned banks still control most banking assets. On September 10, President Shavkat Mirziyoyev appointed his daughter, Saida Mirziyoyeva, to head the planned Tashkent International Financial Centre, Reuters reported. She has led the presidential administration since 2025. Mirziyoyev announced the project at June’s Tashkent International Investment Forum, promising free capital movement alongside tax incentives. Its legal framework would draw on English common law principles, as is the case with Kazakhstan’s Astana International Financial Centre. Who Gets the Tax Breaks? Under the founding law, qualifying participants would receive income and social tax exemptions on financial services income until January 1, 2076. Eligibility requires an actual economic presence in the center and compliance with its rules. The income incentives exclude members of multinational groups with annual revenues of at least €750 million in two of the preceding four fiscal years. Those firms face a domestic top-up tax. The offer is therefore less generous for large multinational groups. A global bank would need a commercial reason to enter Uzbekistan beyond the prospect of a lower tax bill. Most of the foreign businesses operating in Uzbekistan are already concentrated in Tashkent. Almost 63% of the country’s foreign-invested enterprises were based in the capital as of June 1, 2026. Financial firms entering the city would therefore have an existing customer base to pursue, although the numbers alone reveal little about demand for particular services. The domestic banking market does offer scope for competition. In its 2026 assessment, the IMF reported that nine state-owned commercial banks accounted for 63% of banking assets. It also noted delays in privatizing two large banks and urged the authorities to withdraw directed and preferential lending. The center could attract private lenders and help more Uzbek businesses obtain loans. However, simply moving existing deals there to reduce tax bills would do little to expand access to credit. Astana’s Head Start Kazakhstan has operated its financial center since 2018. Its AIFC Court sits outside the national judicial system and uses procedures based on English common law. Businesses can also agree to bring disputes there even when those disputes originate outside the center. The court works directly with Kazakhstan’s authorities to enforce its judgments, and says its first ruling resulted in full payment through private bailiffs. That gives prospective users a concrete example of how a commercial judgment can lead to the recovery of a debt. Uzbekistan’s law likewise provides for an independent commercial court and nationwide recognition of its final judgments. It requires judgments to be published within 30 days, subject to limited confidentiality protections. For lenders, that could reduce uncertainty about committing money to an unfamiliar market. Tashkent would still need to establish a record of decisions and enforcement comparable to the experience available in Astana. The law allows 12 months to adopt essential operating rules, extendable by six months. Activation then requires...

Astana Finance Days 2026

S&P Bolsters Kazakhstan’s Standing as Central Asia’s Financial Hub

S&P Global Ratings has improved its assessment of Kazakhstan’s banking industry as Astana Finance Days opens on September 9, lowering the industry risk score for the country’s banking system from 7 to 6 and citing stronger regulation and supervision. According to Kazakhstan’s Agency for Regulation and Development of the Financial Market, the September 4 decision improved the industry risk component of S&P’s Banking Industry Country Risk Assessment, or BICRA. S&P also changed the trend on Kazakhstan’s separate economic risk assessment from stable to positive. S&P’s BICRA framework evaluates banking systems on a scale of 1 to 10, with lower numbers indicating lower risk. Industry risk assesses factors including banking regulation and supervision, competitive dynamics, and the stability of systemwide funding. Kazakhstan’s overall BICRA grouping remains at 7, while its industry risk score improved from 7 to 6. The industry risk comparison puts the change in perspective. S&P’s published assessments place the United States at 3, Germany at 4, and Brazil at 5. Kazakhstan’s new score of 6 places it alongside banking systems including Bahrain, Oman and Thailand in recent S&P assessments. Within Central Asia, the difference is wider. S&P has assigned Kyrgyzstan an industry-risk score of 8 and Uzbekistan a score of 9. S&P does not currently publish BICRA assessments for Tajikistan or Turkmenistan. S&P also considers Kazakhstan’s banking regulation and supervision more effective than those of Uzbekistan, Kyrgyzstan, Armenia, and Azerbaijan, according to the Kazakh regulator. Stronger Supervision The regulator attributed S&P’s decision to regular asset-quality reviews, risk-based supervisory assessments and measures to limit excessive bank risk-taking, particularly in retail lending. It also cited tighter capital and liquidity oversight and stress testing. The change has already affected individual institutions. The regulator reported an upgrade of the Bank Center Credit’s long-term rating to BB+, while Halyk Bank’s BBB− rating received a positive outlook, indicating the possibility of a future upgrade. The banking decision follows S&P’s August 21 sovereign upgrade from BBB− to BBB with a stable outlook. Kazakhstan remains Central Asia’s only investment-grade sovereign. In an interview with TCA, National Bank Governor Timur Suleimenov linked that improvement to a stronger monetary policy framework, banking resilience, and closer coordination with the government. Kazakhstan also has Central Asia’s most developed capital markets. Almaty’s banks, professional services and Kazakhstan Stock Exchange operate alongside the Astana International Financial Centre and its exchange, giving the country an established concentration of financial business. Capital on the Agenda The timing of S&P’s decision gives the assessment added relevance as Kazakhstan hosts Astana Finance Days. The forum’s announced program includes regulation, law and market confidence, capital market development, and financing for the real economy. Organizers expect more than 5,500 participants from over 80 countries, with representatives of BlackRock, Goldman Sachs and Brookfield among the confirmed speakers. In an August 27 interview with TCA, Zhanbolat Kakishev, chief product officer at the AIFC Authority, said a cumulative $26.3 billion in investment had been attracted to Kazakhstan through the center’s ecosystem, which included more than 6,000 registered companies from 90 countries....

Sanctions

Kyrgyzstan Sanctions Risks Reshape Business

Kyrgyzstan is stepping up action against companies that could expose its banks and wider economy to Western sanctions. On August 18, the authorities moved to forcibly liquidate another 19 legal entities, while major banks are closing the accounts of dozens of clients deemed too risky. Bishkek has not formally joined Western sanctions against Russia, but those restrictions are increasingly determining whom Kyrgyz businesses can work with and which banks they can use to move money. The names of the 19 companies have not yet been disclosed. The authorities stated that they were selected after reviewing around 40 organizations considered to pose heightened sanctions risks. This is not the first such move. In May, the authorities ordered 50 businesses to cease operations after sanctions risks were identified. Their full names were not made public either. First Deputy Chairman of the Cabinet of Ministers Daniyar Amangeldiev said at the time that Western partners provide information about suspicious companies, which Kyrgyz authorities then investigate. He warned that sanctions against Kyrgyzstan itself could disrupt international payments and access to technology. How the Pressure Built Western scrutiny of Kyrgyz companies began well before the current cleanup. In the summer of 2023, the U.S. Treasury Department sanctioned four companies registered in Kyrgyzstan: RM Design and Development, Progress Lider, GTME Tekhnologii, and Cargoline. Washington said they had supplied Russia with electronics and other restricted goods, while Cargoline had shipped millions of dollars’ worth of foreign-made aviation equipment. The focus later expanded from goods to financial networks. In January 2025, the U.S. Treasury sanctioned Keremet Bank, saying it had coordinated with Russian officials and sanctioned lender Promsvyazbank on a scheme to facilitate cross-border transfers. In practice, U.S. sanctions severely restrict a bank’s ability to deal with American companies or use the U.S. financial system. Within days of Keremet Bank’s designation, Visa restricted cards issued by the bank so that they could be used only through Keremet’s own ATMs and payment terminals. In August 2025, the United Kingdom imposed sanctions on Grinex, Tengricoin, Old Vector, and Capital Bank of Central Asia as part of a crackdown on financial and cryptocurrency networks that London said Russia was using to circumvent Western restrictions. By early 2026, however, the risk was beginning to shift from sanctions against individual Kyrgyz companies and banks to restrictions affecting the country as a whole. During a February meeting with EU Sanctions Envoy David O’Sullivan, Amangeldiev discussed financial monitoring, sanctions risks, and greater transparency in foreign trade rather than Kyrgyzstan adopting EU sanctions itself. Bishkek was effectively trying to show that it could tackle sanctions evasion without joining the EU sanctions regime. The prospect of broader measures was already worrying businesses. Askar Sydykov, head of Kyrgyzstan’s International Business Council, said reports that the EU could use its anti-circumvention mechanism against the country were causing serious concern among businesses and government agencies. Those efforts were not enough to prevent broader action. In April, the EU used its anti-circumvention mechanism against Kyrgyzstan for the first time, prohibiting exports to...

Islamic finance

Uzbekistan Establishes Islamic Finance Council as New Banking Law Takes Effect

The Central Bank of Uzbekistan has established an Islamic Finance Council to coordinate the work of banks, microfinance organizations, the Deposit Guarantee Agency and other institutions operating under Islamic financial principles. The council was created weeks after Uzbekistan’s new Islamic banking law took effect on June 29. It will prepare national standards, issue regulatory and supervisory recommendations, advise financial institutions and represent the Central Bank in its work with international standard-setters. Building an Islamic Finance Framework Islamic finance prohibits interest and generally requires financing to be linked to assets, trade, leasing or risk-sharing. Common structures include murabaha, in which a bank buys and resells an asset at an agreed markup, and ijara, which operates broadly like leasing. Sharia Specialists Form Council Majority The council has five members: four specialists from the Fatwa Center under the Muslim Board of Uzbekistan and one financial-sector expert. Saidjamol Masayitov, a chief specialist at the Fatwa Center, will chair the council. Muhammadyubkhon Khomidov, also a chief specialist at the center, will serve as deputy chairman. The other members are Fatwa Center specialists Hikmatilla Toshtemirov and Abdullatif Tursunov, along with Akhrorjon Sadullayev, managing partner of Orient Audit Group. Sadullayev has more than 20 years of experience in banking, finance and auditing. The council is intended to combine Sharia expertise with financial regulation. It will report annually to the Central Bank’s board. From Legislation to Implementation Uzbekistan has been developing an Islamic finance framework for several years. Legislation adopted in 2022 allowed microfinance organizations to provide services based on Islamic principles, while detailed regulations introduced in 2024 covered instruments including mudaraba, murabaha, musharaka, ijara and salam. The Central Bank is also preparing a national Islamic finance roadmap for 2026-2030 with assistance from the Islamic Financial Services Board. The work covers banking, capital markets, insurance, professional training and the wider legislative framework. Law No. O’RQ-1126, signed on March 27, established a dual banking model. Stand-alone Islamic banks can operate alongside Islamic “windows” within conventional commercial banks. The law also created a special licensing system and defined permitted Islamic financial operations. Uzbekistan had previously planned to introduce its first Islamic finance services through a commercial bank in 2027, with at least three banks expected to offer them by 2030. Licensing Rules Approved The Central Bank has now amended its licensing regulations for Islamic banks and Islamic windows. The changes were registered by the Ministry of Justice on July 17 and took effect upon official publication. Applicants must submit Sharia-compliance policies, information about their institution-level Islamic finance council, evidence of dedicated internal oversight and audit systems, and a three-year business plan. Existing conventional banks will require a separate license to open an Islamic window. Council candidates must receive Central Bank approval and meet education and professional-experience requirements. At least one member must hold a certificate from the Accounting and Auditing Organization for Islamic Financial Institutions, or AAOIFI. Certification will become mandatory for all council members from July 1, 2027. Adopting International Standards The Central Bank joined AAOIFI as a regulatory...

Tax Policy

Uzbekistan Bank Data Plan Sparks Privacy and Tax Debate

A draft government resolution that would establish unified rules for information sharing between banks and tax authorities has triggered widespread public debate in Uzbekistan, with supporters describing it as a necessary step to combat the shadow economy while critics warn it could weaken constitutional protections for banking privacy. The proposal, published for public discussion by Uzbekistan’s State Tax Committee, aims to regulate how banks provide information to tax authorities. According to the committee, the document does not introduce new powers for tax officials or abolish bank secrecy. Instead, it seeks to define the procedures, deadlines, formats, and electronic methods for exchanging information already permitted under existing legislation. The proposal attracted significant attention after some media reports suggested it would allow tax authorities to gain broad access to citizens’ bank accounts and deposits. Responding to the growing discussion, the State Tax Committee issued a public explanation, arguing that these interpretations do not accurately reflect the draft’s content. “The draft does not grant tax authorities new powers, does not abolish bank secrecy, and does not provide free access to the bank accounts of citizens or businesses,” the committee said. It stressed that banks would continue to provide information only in cases established by law. The committee pointed to Article 134 of the Tax Code and the Law on Bank Secrecy, which already allow banks to share information related to taxation with state tax authorities under specific legal procedures. It also emphasized that any information received by tax authorities is itself protected as tax secrecy and cannot legally be disclosed or used for purposes other than tax administration. Officials further argued that similar information-sharing mechanisms exist in many countries, including members of the Organisation for Economic Co-operation and Development (OECD). Uzbekistan has also joined the Global Forum on Transparency and Exchange of Information for Tax Purposes, requiring the country to develop clear and transparent rules in this area. Despite these assurances, the proposal quickly became one of the country’s most discussed regulatory initiatives. One of the most controversial provisions concerns peer-to-peer (P2P) transfers. Under the draft, banks would report cases where an individual’s bank card or electronic wallet receives transfers totaling at least 500 times the base calculation amount during a calendar month from people other than close relatives. The measure is intended to identify cases where personal bank cards are allegedly being used for unregistered commercial activity. Economist Otabek Bakirov criticized the proposal, arguing that it contradicts constitutional guarantees protecting banking secrecy. Referring to Article 41 of Uzbekistan’s Constitution, he noted that the confidentiality of bank operations, deposits, and accounts is guaranteed by law. Bakirov also recalled that previous attempts to introduce similar monitoring of P2P transactions had been abandoned following constitutional reforms. “I hope this attempt will also fail,” he wrote, calling on parliament, the Central Bank, the Ministry of Justice, the Ministry of Economy and Finance, journalists, and the public not to remain silent during the discussion. Public comments submitted during the consultation have echoed many of these concerns. According...

EU Sanctions

EU Removes Three Tajik Banks from Sanctions List

The European Union has removed three financial institutions in Tajikistan from its sanctions list. The decision was adopted on April 23, as part of the EU’s 20th sanctions package, according to the National Bank of Tajikistan. The move concerns Spitamen Bank, Dushanbe City Bank, and Commercebank of Tajikistan, which had previously been subject to restrictions introduced on November 12, 2025. “As a result of productive dialogue and cooperation between the relevant authorities of the Republic of Tajikistan and European partners, a favorable basis has been created for reviewing previously imposed restrictions,” the National Bank said. The National Bank also noted that the decision reflects strengthened cooperation between the regulator, government ministries, and the European Commission, as well as the consistent implementation of international compliance standards and improvements in anti-money laundering systems. “The adoption of this decision is viewed as a direct result of expanded cooperation with the European Commission, the consistent implementation of international compliance standards, and the strengthening of mechanisms to combat money laundering,” the statement said. The regulator believes the move will provide a strong boost to the development of the banking sector, increase investor confidence, and expand financial services in the country. The sanctions against the three Tajik banks had originally been introduced under the EU’s 19th package of restrictions against Russia. According to the Council of the EU, the measures included a ban on transactions with certain banks and companies from third countries suspected of facilitating sanctions circumvention. At the time, Brussels considered these institutions potential channels for bypassing restrictions imposed on Russia. The list also included financial entities from Kyrgyzstan, Kazakhstan, the United Arab Emirates, Hong Kong, China, and India. However, specific cases or transaction volumes that led to the sanctions were not disclosed. The wording remained general, referring to “assistance in sanctions circumvention” and “support for the Russian economy.” In response, Tajik authorities worked to secure the removal of the restrictions, providing additional guarantees and information to the EU demonstrating that the banks’ financial operations comply with international standards. For its part, the EU showed readiness to reconsider the measures, taking into account changes in the banks’ financial practices and Tajikistan’s efforts to strengthen domestic financial regulation.