New Zealand gov't announces review of "tax haven" trust rules

New Zealand's reportedly lax foreign trust disclosure rules are to be reviewed, the government said Monday amid claims the country was operating as a tax haven.

The government had appointed a "highly regarded tax expert" to review the disclosure rules to see if they were still fit for purpose, Finance Minister Bill English said in a statement.

"Our rules require foreign trusts to be registered and to keep detailed financial and other records, which can be requested by Inland Revenue and passed on to tax authorities in other countries," English said.

"In addition, we have a strong tax treaty network with the express purpose of discovering and preventing tax avoidance."

The terms of reference for the review, to report by June 30, included reviewing foreign trust disclosure rules as they applied to record keeping, enforcement and the exchange of information with other tax jurisdictions.

Revenue Minister Michael Woodhouse said the Organization for Economic Co-operation and Development (OECD) group of developed nations had rated New Zealand as "compliant" in its disclosure rules.

"Claims that New Zealand is a tax haven are wrong," Woodhouse said in the statement.

Opposition lawmakers said the government had to restore the country's reputation and demanded a more open and comprehensive inquiry.

The main opposition Labour Party said the government was trying to downplay the possibility that "ill-gotten gains" were being laundered through more than 12,000 foreign trusts registered in New Zealand.

"What is needed is a full public inquiry with the power to subpoena witnesses and question them under oath," Labour Party leader Andrew Little said in a statement.

"It must also identify the different ways foreign trusts can be used for tax avoidance and tax evasion -- in both New Zealand and overseas territories. And it must recommend how information can be proactively shared with tax treaty partners," said Little.

Critics claim that New Zealand foreign trusts enable tax avoidance because they have no requirement to register either the trust beneficiaries or the source of assets.
Source: Xinhua