Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Foreign trusts must be broken open

7 September 2012

Foreign trusts must be broken open

Revenue Minister Peter Dunne tonight endorsed tax avoidance as a legitimate practice when challenged about the use of secret New Zealand foreign trusts as a tax haven.

TV3's 60 minutes highlighted problems with the trusts and Mr Dunne responded that the behaviour was "legitimate tax avoidance".

"Mr Dunne's repeated reference to legitimate tax avoidance was astounding. The tax system is being undermined by the minister in charge of it," Green Party co-leader Russel Norman said.

"New Zealand’s foreign trusts form part of a trillion dollar tax haven industry that should be transparent to help stop tax evasion."

New Zealand’s foreign trust law allows non-residents to set up trusts here in New Zealand holding assets not liable for taxation. There are approximately 8000 foreign trusts registered with the Inland Revenue Department (IRD) holding assets estimated to be worth tens of billions of dollars. Little information is required to register a foreign trust which means ownership is effectively anonymous and assets are invisible.

“New Zealand’s foreign trusts hide billions of dollars of assets and should be broken open to help stop the global tax evasion industry,” said Dr Norman.

“We’ve become a major participant in a global tax avoidance problem due to our lax taxation laws surrounding foreign trusts.

“It’s time to demand some transparency from our foreign trust regime.”

The Law Commission reported in 2010 that our taxation rules have led to a substantial foreign trust industry in New Zealand. Our lax disclosure requirements – uncommon in the OECD – combined with our settled political and legal system ‘make New Zealand an attractive haven for offshore trusts’.

“IRD has few tools, if any, to help foreign governments pursue tax cheats,” said Dr Norman.

“IRD has such lax disclosure and reporting standards, it recently disclosed in a Parliamentary question that it doesn’t even keep records of how many governments approached them requesting information on our foreign trusts.

“We’re not pulling our weight in the global effort to fairly tax the world’s super rich.

“Tax avoidance on this scale, when you boil it down, means middle and lower-income taxpayers are having to pay more tax to cover the shortfall for the health and education services their governments are trying to provide,” Dr Norman said.

The Green Party will move to require foreign trusts in New Zealand to register and disclose more complete information on the identity of the settlors, their country of residence, related parties, and require annual financial reporting. This would enable real-time information sharing with those 37 countries New Zealand currently has double tax agreements with.

Parliamentary Question for Written Answer (#07369):
Question: How many times, if any, has the Inland Revenue Department investigated foreign trusts in New Zealand since January 1, 2007?
Minister of Revenue, Hon Peter Dunne: Inland Revenue regularly reviews the operation of foreign trusts as part of its on-going compliance activities. For example, in the course of several investigations since 2007, Inland Revenue came across some foreign trust arrangements that might have had a purpose of avoiding tax. Inland Revenue subsequently exchanged its findings with other jurisdictions under double tax agreements. Inland Revenue keeps records about its investigations in general, but the number of investigations specifically relating to foreign trusts is not recorded.

ENDS

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

 

Breed Laws Don’t Work: Vets On New National Dog Control Plan

It is pleasing therefore to see Louise Upston Associate Minister for Local Government calling for a comprehensive solution... However, relying on breed specific laws to manage dog aggression will not work. More>>

ALSO:

Not Waiting On Select Committee: Green Party Releases Medically-Assisted Dying Policy

“Adults with a terminal illness should have the right to choose a medically assisted death,” Green Party health spokesperson Kevin Hague said. “The Green Party does not support extending assisted dying to people who aren't terminally ill because we can’t be confident that this won't further marginalise the lives of people with disabilities." More>>

ALSO:

General Election Review: Changes To Electoral Act Introduced

More effective systems in polling places and earlier counting of advanced votes are on their way through proposed changes to our electoral laws, Justice Minister Amy Adams says. More>>

Gordon Campbell: On Our Posturing At The UN

In New York, Key basically took an old May 2 Washington Post article written by Barack Obama, recycled it back to the Americans, and still scored headlines here at home… We’ve had a double serving of this kind of comfort food. More>>

ALSO:

Treaty Settlements: Bills Delayed As NZ First Pulls Support

Ngāruahine, Te Atiawa and Taranaki are reeling today as they learnt that the third and final readings of each Iwi’s Historical Treaty Settlement Bills scheduled for this Friday, have been put in jeopardy by the actions of NZ First. More>>

ALSO:

Gordon Campbell: On The Damage De-Regulation Is Doing To Fisheries And Education, Plus Kate Tempest

Our faith in the benign workings of the market – and of the light-handed regulation that goes with it – has had a body count. Back in 1992, the free market friendly Health Safety and Employment Act gutted the labour inspectorate and turned forestry, mining and other workplace sites into death traps, long before the Pike River disaster. More>>

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news