Uzbekistan will offer tax incentives to banks, investment companies and certain real estate buyers to encourage the recovery of bad debts without recourse to the courts. Property voluntarily surrendered to a bank in settlement of a debt will also be allowed to be sold directly to buyers.
These steps were implemented by a presidential decree.
Under the decree, a range of tax incentives will apply until January 1, 2030 to real estate that commercial banks take onto their balance sheets in lieu of debt repayment, as well as to properties held on the books of investment companies founded by banks.
Commercial banks that take such real estate onto their balance sheets will be waived from property and land tax for six months. For bank-founded investment companies, the same waiver will apply for 12 months from the date the property is recorded on the balance sheet.
Buyers who purchase such properties in full will likewise be exempt from property and land tax for 12 months.
A further incentive concerns debtors who voluntarily hand over property to a bank. Under the decree, a legal entity that surrenders its property to a commercial bank under an agreement waiving ownership in exchange for debt relief will be exempt from value-added tax.
A separate VAT procedure will also apply when commercial banks sell such repossessed property on an installment basis over a period exceeding one year: VAT will be calculated not on the full sale price, but on the positive difference between the sale price and the property's book value.
Direct sales are to be permitted
To further encourage out-of-court debt recovery, banks with state participation will be granted additional powers.
Property transferred to a state-owned bank under a debtor's voluntary waiver agreement may now be sold directly at market value — not only for a lump-sum payment, but also on credit, in installments, through leasing arrangements, or via other transactions not prohibited by law.
The decree also simplifies the process for transferring collateral to banks. Notaries will be authorized to complete the relevant notarial procedures even where tax authorities or the Bureau of Compulsory Enforcement have imposed restrictions over outstanding tax or other mandatory payments. The state cadastre agency will be able to register ownership rights to such properties accordingly.
In addition, if property or ownership stakes transferred by state-owned banks to the Agency for the Management of State Assets remain unsold after one year, they will be returned to the bank upon request.
The new mechanisms are designed to accelerate the return of debt-related assets into economic circulation and to expand opportunities for resolving bad debt outside the court system.
Stay up to date with all the latest news:
