Uzbekistan will permit the issuance of four types of Islamic securities.

1 hour ago

Tashkent, Uzbekistan – Podrobno.uz News Agency.

Uzbekistan intends to establish a legal framework for the issuance of sukuk – securities that comply with the principles of Islamic finance. The draft law envisages four types of this instrument: partnership, lease, trading, and agency, as reported by a Podrobno.uz correspondent from a press conference at the National Agency for Promising Projects.

Unlike traditional fixed-rate bonds, sukuk yields will be tied to a specific asset or commercial transaction. Funds cannot be used for activities that conflict with Islamic finance standards, such as alcohol and tobacco production or gambling.

The securities will be issued by a special purpose vehicle (SPV), established by the project initiator. It will acquire the allocated assets, the proceeds from which will be used to fulfill obligations to investors. Such assets will be accounted for separately from the company's equity, which is intended to protect sukuk holders in the event of financial difficulties for the issuer.

The compliance of the asset, source of income, and the entire transaction with the principles of Islamic finance must be confirmed by a Sharia council. A representative of sukuk holders will monitor compliance with the terms of the issue and protect the interests of investors.

The bill also provides for the possibility of issuing not only corporate but also government sukuk. They can be issued on behalf of Uzbekistan by the Central Bank or another government body authorized by a decision of the president or the Cabinet of Ministers.

Tax incentives are also proposed for the new instrument. Income from sukuk is planned to be exempt from personal income tax and corporate tax until 2038. Incentives are also provided for transactions between the issuer and a special financial company. The document has already passed its first reading in the Legislative Chamber.

It was previously reported that Uzbekistan is finalizing the regulatory framework for the issuance of "green sukuk," intended to finance environmental and sustainable projects.