Foreign Exchange Control Act
The Foreign Exchange Control Act was published in the Official Gazette on March 23, 2020, and became effective per March 24, 2020.
The Act states the following – summarized.
1. Going forward the only exchange rate for USD and EURO that may be used is the exchange rate published by the Central Bank (buy SRD 7,396 – sell SRD 7,520).
2. It is forbidden to apply any other exchange rate than the one published by the Central Bank. All and any transactions should be executed according to the Central Bank exchange rate.
3. Cash transactions in foreign currency are prohibited (i.e. purchase and sale in cash with foreign currency is prohibited).
4. Contracts should be denominated in the Surinamese Dollar (SRD) if it regards cash payments or cash receipts.
5. Prices for goods or services should only be denominated in SRD.
6. Advertisements for goods or services should only be denominated in SRD.
7. Foreign currency may only be purchased from the commercial banks or the Central Bank. This purchase will be according to the Central Bank exchange rate.
8. All legal entities and individuals are obligated to repatriate to Suriname at least 60% of their export revenue. The mining sector should repatriate at least 50% of their export revenue.
9. For import of goods, local legal entities or individuals should source their foreign currency need through the commercial banks or the Central Bank. There will be an approval and control process.
10. Individuals may only source foreign currency for support obligations (e.g. children studying abroad), travel, study or medical purposes or for repayment of credit card debt.
11. A supervisory body will oversee implementation of this Act. The supervisory board will consist of representatives from the Ministries of Finance, Trade and Justice, from the Foreign Exchange Commission, from the Department of National Security and from the Central Bank.
12. Existing contracts have 30 days to make amendments so that they are denominated in SRD.
13. Non-compliance with this Act may be considered an economic crime, punishable with a fine, confiscation and imprisonment.
This Act was voted into Law by Parliament after a surprise amendment of a related Act at 5 am Saturday morning, March 21st , 2020. The main change will be that companies and individuals will not be able to freely source foreign currency if they don’t have an import need or one of the other specified reasons. The official Central Bank exchange rate is the only exchange rate that may be applied. The foreign exchange rate determined by the market is not allowed.
¨ It is not clear how this Act applies to companies with foreign shareholders. Some foreign companies have revenue in SRD and would normally source USD or EURO to repatriate profits after tax. That will become difficult or impossible under this new Act.
¨ Mining, Oil & Gas and other International Companies have specific foreign exchange exemptions in certain cases. It is unclear how this Act should fit in that legal framework. We – however – feel that this Act should not affect existing foreign exchange exemptions with basis in the Law. The exemptions in other legislation should then be seen as ‘lex specialis’ to this Act.
¨ There are many other queries this Act gives rise to. After protest from various stakeholders, there is deliberation on which amendments and clarifications should be included in the Act. We expect the amendments in the coming days or weeks.
If you are affected by this Act, we suggest to make sure your concerns are taken into account by Parliament and Government. We are happy to discuss this Act with you and what action can be taken.
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