Russian investments in Abkhazia

The Abkhazian Parliament is expected to either approve or reject the agreement on Russian investments in the near future, with the Kremlin pushing for its signing. The Abkhazian opposition opposes the agreement, viewing it as colonial.

According to the agreement “On the Implementation of Investment Projects in the Republic of Abkhazia by Russian Legal Entities,” Russian companies investing more than 2 billion rubles (about 21 million dollars) in Abkhazia will receive unprecedented benefits.

In particular, the government of Abkhazia commits to:

• Provide the investor with land plots necessary for the implementation of investment projects and a quota for foreign workers;
• Exempt the investor from paying customs duties when importing construction materials and equipment into Abkhazia;
• Exempt the investor from paying property tax and corporate profit tax for 8 years from the date of the commissioning of capital construction projects;
• Grant the right to reimburse value-added tax (VAT) from the Abkhazian budget if, at the end of the tax period, the amount of tax deductions exceeds the total amount of tax calculated on transactions considered taxable.

Additionally, the investor is guaranteed priority access to capacities and connections to infrastructure and communication networks necessary for the project’s implementation.

Lastly, investors benefiting from the preferential regime will be serviced by specially opened Russian banks in the republic, which contradicts local banking legislation.

The Abkhazian opposition has labeled this agreement as “colonial” and stated that it does not align with the interests of Abkhazia at all.

In their view, if the agreement comes into effect, local businesses will not be able to withstand the competition and will simply go bankrupt.

Opposition leader Adgur Ardzinba believes that the agreement is tailored to benefit certain Russian oligarchs, who are being actively lobbied for by the President of Abkhazia, Aslan Bzhania.

Members of Abkhazia’s banking community are also displeased. On October 3, during a meeting with members of parliament, they expressed strong opposition to the proposed agreement.

According to a law passed in early 2024, if parliament does not approve the agreement, the government of Abkhazia does not have the right to sign it. This law was enacted specifically because earlier agreements between Russia and Abkhazia, signed by the president, ministries, etc., without parliamentary approval, had sparked public outrage.