Abkhazia plans to ban duty-free shops, citing harm to local retailers

Abkhazia is considering a ban on the operation of duty-free shops inside the territory of the republic. Lawmakers argue that such outlets undermine legitimate suppliers of excisable goods, primarily alcohol and cigarettes.

At present, around ten duty-free shops operate in Sukhum and other towns across Abkhazia. Officially, only diplomats and other foreign nationals with special status are entitled to shop there. In practice, however, the stores are used by the general public. Local observers say this is possible because the shops are linked to figures close to the authorities, who are able to ignore the rules with impunity.

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Since the Abkhaz authorities began issuing licences for duty-free shops five years ago, most local suppliers of alcohol and cigarettes have either gone bankrupt or sharply reduced their operations. This, in turn, has had a negative impact on the republic’s budget revenues.

Now, following heated debates in parliament, the presidential administration has pledged to submit draft legislation within ten days that would ban the operation of such shops.

If the law is adopted, duty-free outlets would remain only at exit points from Abkhazia, at border crossings.

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Meanwhile, another law has already been adopted, raising the profit tax for duty-free shops from a preferential 15% to 25%. Lawmakers estimate that the measure will increase budget revenues by 100 million roubles (about $1.31m).

However, judging by reactions on social media, many people are sceptical that parliament will succeed in banning “internal” duty-free shops. Critics argue that deputies are likely to face strong resistance from influential owners of the outlets.

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Duty-free shops in Abkhazia