Dividends, zakat and tax: a practical guide for US stock holders

When a dividend arrives from a US stock, three questions come up: how much does the US withhold, what do you need to do in Uzbekistan, and how is zakat calculated? Let's go through them in order.

As of October 2026. Tax rules change — for larger amounts, always consult a tax professional.

1. The US side: tax withheld from dividends

When a dividend is paid to a non-US investor, the US withholds tax at source. The default rate is 30%. Citizens of countries with a double tax treaty get a lower rate (often 15%).

There is no modern treaty with Uzbekistan. The US still applies the 1973 US–USSR treaty to Uzbekistan, but it provides no reduced rate for dividends. The two countries started negotiating a new treaty in 2019, but it is not yet in force. In practice: 30% is withheld from your dividends.

When you open an account, your broker will ask for a W-8BEN form — it certifies that you are not a US resident. Without it the broker may apply additional withholding.

The good news: a non-US person generally pays no US tax on gains from selling shares (capital gains) — withholding applies to dividends only.

2. The Uzbekistan side: the declaration

An Uzbek tax resident (someone present in Uzbekistan for more than 183 days in the year) is taxed on worldwide income. If you received income from abroad:

• you must file a personal income declaration by 1 April of the following year (through your soliq.uz personal account);
• the rate on a resident's dividend income is 5%; other income (including gains from selling shares) is taxed at the general rate of 12%.

An important catch: credit for tax paid abroad is generally tied to the existence of a double tax treaty. Since there is no modern treaty with the US, it is unclear whether the 30% withheld in the US will be credited in Uzbekistan. Clarify this with a tax professional or the tax authority.

3. Zakat: how it applies to shares

Shares are wealth — if your total wealth exceeds the nisab (roughly the value of 85 grams of gold) and one lunar year (hawl) has passed, zakat is due. The rate is 2.5%.

Scholars treat shares differently depending on intention:

• Shares bought for trading (to resell in the short term) are treated like merchandise. Zakat is 2.5% of the full market value.
• Shares bought for the long term (for dividends and growth) make you a part-owner of the company. Under AAOIFI Shariah Standard No. 35, zakat is due only on your share of the company's zakatable assets (cash, receivables, inventory) — not on fixed assets like factories and equipment.

The second method requires finding the share of zakatable assets in the company's filings. If you can't calculate it precisely, the cautious path is 2.5% of the full market value. Ask your own scholar which method suits you. You can compare both methods in the stock zakat calculator.

4. Purification is not zakat

Giving away the small impermissible-income share of a halal stock — purification — is a separate obligation from zakat. Purification money cannot be counted towards zakat.

Example

Say you are an Uzbek resident holding shares of company "A" for the long term:

• $1,000 in dividends was declared during the year;
• the US withheld 30%: $700 reached your account;
• the company's purification ratio is 1.5%: $1,000 × 1.5% = $15 to charity (purification is calculated on the full dividend);
• your portfolio is worth $20,000 on your hawl date, and about 40% of the company's assets are zakatable: $20,000 × 40% × 2.5% = $200 zakat (cautious method: $20,000 × 2.5% = $500);
• in Uzbekistan: you report the $1,000 dividend in your declaration by 1 April of the following year; whether additional tax is due depends on whether the US tax is credited (see above).

In short

1. Fill in the W-8BEN with your broker — expect 30% withholding on dividends.
2. Foreign income — declare it on soliq.uz by 1 April.
3. Calculate zakat according to your intention; if in doubt, use the full value.
4. Give purification separately from zakat.

On choosing halal stocks: AAOIFI standard in plain language and the halal stocks list.

This article is for information only: it is not a fatwa, nor tax or investment advice. Consult your own scholar on religious matters and a tax professional on tax matters.