Panama Papers show surge in foreign trusts in NZ

Monday 09 May 2016 03:55 PM

Former IRD minister Dunne concerned that Panama Papers show surge in foreign trusts in NZ

May 9 (BusinessDesk) - Peter Dunne, who was Minister of Revenue from 2005 to 2013, says he is concerned that a fourfold increase in the number of foreign trusts in New Zealand, revealed in the Panama Papers, could harm the nation's reputation.

“That explosion inevitably raises perceptions that New Zealand is being used a tax haven, and that is not good for our international reputation," Dunne said. "These revelations challenge the identity of New Zealand – we do not want to be seen as a country that enables tax evasion."

Prime Minister John Key has repeatedly rejected the idea that New Zealand is a tax haven while appointing former PricewaterhouseCoopers chief John Shewan to look into disclosure rules for New Zealand's foreign trust regime. He has been forced to defend his own government after it was disclosed that his former lawyer, Ken Whitney, was a member of a lobby group for the local foreign trust industry that had urged Revenue Minister Todd McClay not to let the Inland Revenue Department conduct a review of New Zealand's permissive foreign trust regime.

The United Future leader said he was also concerned that the tax department hadn't flagged any issues with the foreign trust regime while he was the minister.

"Was Inland Revenue not aware of what was going on, or did they genuinely perceive the issue to be unimportant," he said.

Some 11.5 million documents from Mossack Fonseca, the Panamanian law firm at the centre of the Panama Papers leak, are to be made public early tomorrow. More than 61,000 of the 11.5 million documents set to be released online tomorrow mention New Zealand. According to Nicky Hager, who is part of an international group of investigative journalists who have had access to the papers, more than 61,000 of them mention New Zealand.

Dunne said New Zealand has made progress in signing up to double tax agreements and tax information exchange agreements in recent years but none has yet been inked with South American states that have been among the most active in establishing foreign trusts in New Zealand. More work was needed to ensure such trusts weren't vehicles for criminal tax evasion and money-laundering.

"New Zealand needs to do all it can to avoid the label of tax haven from sticking," Dunne said. "The bottom line is that being labelled a tax haven has in transparency and reputation terms, the same impact that an outbreak of foot and mouth disease would have on our reputation as a viable primary producer.”

(BusinessDesk)

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