In a response to a recent nuance added to his earlier claim that Suriname’s tax legislation does not include a formal fiscal ringfence, legal expert Siegfried Kenswil has systematically refuted the counterargument put forward by Shyamnarain, breaking down the two core pillars of the opposing position and explaining why their interpretation does not hold up under close legal examination.
Shyamnarain’s counterargument rests on two key legal provisions: Article 19 of Suriname’s Petroleum Act and Article 19.2.1 of the model Production Sharing Contract (PSC). Kenswil first addresses the status of Article 19 of the Petroleum Act, clarifying that this article is exclusively a registration and compliance requirement, not a substantive tax rule. The first clause of Article 19 mandates that all petroleum contractors maintain an office in Paramaribo, while the second clause requires this office to be registered in line with national legal requirements. Kenswil notes that both the 1990 explanatory memorandum to the original Petroleum Act, which explicitly links this provision to the Code of Commerce and the Trade Register Act, and the 2022 legislative amendment confirm this framing: Article 19 exists only to ensure contractors meet existing tax filing and payment obligations, not to impose new deduction limits for individual fields or contracts. Reading a fiscal ringfence into this provision is a creative interpretation, but it is not legally defensible, Kenswil argues.
Turning to the second pillar of the counterargument, Article 19.2.1 of the model PSC, Kenswil emphasizes that this provision explicitly defers all tax rules to the 1922 Income Tax Act – legislation that does not include any fiscal ringfence provision. While Article 19.2.1 outlines guidance for allocating revenues and costs for contract purposes, all formal tax assessment is carried out under the terms of the national income tax law, not the contract itself. This means the PSC cannot create an independent fiscal regime, a position that the 2022 legislature explicitly confirmed: petroleum contracts cannot grant tax privileges that are not already established in statutory law, and all tax-related terms in PSCs are bounded and governed by Article 9(1) of the Petroleum Act.
A critical point of confusion that Kenswil unpacks is the difference between a contractual cost recovery ringfence and a statutory fiscal ringfence. The ringfencing outlined in the PSC is a commercial mechanism that limits which costs can be offset against oil revenues from each individual commercial field. This is fundamentally different from a fiscal ringfence that would isolate tax liabilities for tax assessment purposes. Further, Kenswil points out that PSC ringfencing applies per commercial field, while Shyamnarain’s argument applies it per contract block. The Petroleum Act explicitly draws a distinction between these two terms: a field is defined as a geologically bounded hydrocarbon accumulation, while a block is the formal contract area, and the law explicitly notes their boundaries do not always align. Shyamnarain’s argument incorrectly conflates contractual cost recovery with tax assessment, and fields with blocks, Kenswil says.
Kenswil also pushes back on Shyamnarain’s warning that his original claim could spark unnecessary disputes between industry parties. He notes that since the first PSCs were implemented in Suriname, all tax filings have been submitted without fiscal ringfencing, and have consistently been accepted by the Suriname Tax Administration without objection. There has been no existing dispute over this issue until now. This long-standing practice has a clear practical basis: a foreign company operating across multiple blocks is still a single tax payer under Suriname law, requiring a single unified tax filing. Both Staatsolie, Suriname’s state oil company, and the Suriname government are well aware that the same contractor company typically signs multiple PSCs for different blocks. The Tax Administration’s administrative and operational systems are not structured to split a single legal entity into multiple separate permanent establishments or branches, each with isolated tax liabilities per block.
Kenswil concludes that the current debate over fiscal ringfencing is only being created by claims that the mechanism applies to PSCs that have been operational for many years. Existing contracts also include formal stabilization clauses and guarantees that protect contracting parties from retroactive regulatory changes. A shifting interpretation by implementing authorities does not qualify as a formal legislative change that can be applied retroactively to existing contractual relationships, he adds.