Uzbekistan Considers Cashback for Home Purchases to Reduce Shadow Economy

Tashkent, Uzbekistan (UzDaily.com) — Uzbekistan is considering the introduction of a cashback mechanism for home purchases. This topic was discussed on August 29 during an open dialogue with representatives of the construction sector, organized by the country’s Chamber of Commerce and Industry (CCI).

CCI Chairman Davron Vakhabov emphasized that a significant portion of real estate transactions occurs without paying value-added tax (VAT): only about 10% of deals include VAT, while the remaining 90% are conducted without it.

In this context, he proposed implementing a tax cashback mechanism for individuals, amounting to 4–5% of the transaction value, provided the buyer requests an official invoice from the developer.

According to Vakhabov, such a measure could encourage citizens to formalize transactions and reduce the share of the shadow economy in the construction sector.

The sector currently has one of the highest shares of the shadow economy in the country — approximately 41%, estimated at 97 trillion soums. Unpaid taxes total 1.2 trillion soums, and detected embezzlement amounts to 203 billion soums. In 2024, more than half of the sector’s workforce was employed informally: 322,000 people compared to 294,000 officially employed.

Earlier discussions also considered banning cash payments for real estate purchases. Currently, the majority of housing transactions are conducted in cash.

Under the new initiative, all payments would be made exclusively through banks, fully complying with legal procedures and formal channels.