On July 17, 2026, legal expert Siegfried G. Kenswil LLM published an opinion piece titled ‘The Contract That Underpins Suriname’s Oil Era’, where he introduced his book *The Surinamese Production Sharing Contract*. While Kenswil’s piece is overall a valuable read for stakeholders in Suriname’s growing oil and gas sector, one key claim he made requires critical nuance to prevent unnecessary confusion and conflict between the Surinamese government, specifically the tax authority, and oil and gas contractors and their advisors.
The contentious claim centers on Kenswil’s assertion that the so-called ring fence outlined in Suriname’s Production Sharing Contracts (PSC) is purely a contractual cost-recovery mechanism, and that no statutory fiscal ring fence – which limits tax deduction eligibility to individual fields or contracts – currently exists in Surinamese tax law. Kenswil further argues that introducing such a framework would require legislative action, and applying it retroactively to existing contracts would violate state guarantees of legal certainty and policy stability.
However, Kenswil’s opinion does not clearly outline the legal basis for his claim that Suriname lacks a statutory fiscal ringfencing regime. This gap risks leading readers to the incorrect conclusion that Suriname has no existing legal rules governing ringfencing for income tax collection from oil and gas contractors. In fact, the opposite is true: Suriname has held a clear legal basis for fiscal ringfencing since the 1990 Petroleum Act, specifically in Article 19.
Article 19 of the 1990 Petroleum Act mandates that any contractor carrying out operations under a petroleum PSC in Suriname must establish a dedicated local office for each individual agreement, and register this office in compliance with national regulations. Article 11 of the same Act confirms that this requirement applies to every petroleum agreement a contractor enters into. This means contractors are legally obligated to set up separate registered entities for every PSC they sign in Suriname.
This mandatory separation of entities carries direct implications for income taxation. A local office of a foreign contractor typically takes one of two legal forms: a local branch or a wholly-owned local subsidiary. Both structures are required to register with the Suriname Chamber of Commerce and Industry (KKF) and register as distinct taxpayers with the Surinamese Tax Administration. A branch of a foreign enterprise is formally classified as a permanent establishment for Surinamese income tax purposes, falling under local tax jurisdiction.
Depending on the legal structure chosen, the separate office is classified as either a non-resident taxpayer (for branch structures) or a resident taxpayer (for subsidiary structures) for income tax purposes. Since each PSC corresponds to a single legally defined exploration or production block, this separation requires that income tax assessments are conducted separately for each block. As a result, costs accrued from one block cannot automatically be deducted against revenues generated from a separate block. Through this provision in the 1990 Petroleum Act, Suriname’s legislature already embedded fiscal ringfencing into the regulatory framework for oil and gas contractors.
This statutory requirement is also explicitly reflected in Suriname’s standard model PSC, confirming that both contractors and the state have long recognized the application of fiscal ringfencing. Article 19.2.1 of the model PSC outlines which revenues and costs are counted when calculating a contractor’s taxable income. For eligible costs, the rule specifies that only expenses linked to or arising from the PSC for the specific block in question can be counted, whether they qualify for cost recovery or not. By signing a PSC containing this clause, contractors voluntarily agree to abide by this ringfencing framework.
In conclusion, this clarification makes clear that fiscal ringfencing for oil and gas contractors in Suriname already holds full legal grounding under existing law. When the Surinamese Tax Administration applies ringfencing to assess income tax from oil and gas contractors, no additional legislative action is required. This application does not breach existing contracts, nor does it violate legal certainty or the state stability guarantees outlined in State Decree S.B. 2018 No. 52.
By Roy Shyamnarain, Fiscal and Legal Advisor based in Paramaribo