7 November 2013

Foreign trusts earn New Zealand tax haven status

New Zealand has been recognised as a tax haven by the Tax Justice Network for the first time today, the Green Party said.

The Tax Justice Network produces the most comprehensive report of tax havens and today ranked New Zealand for the first time on its Financial Secrecy Index. New Zealand features on the Index due to our lack of transparency around foreign trusts and registered companies, and our below-average levels of co-operation with other countries when it comes to fighting international tax evasion.

“New Zealand’s international reputation as a transparent and well-regulated financial services centre took another step backwards today with our appearance for the first time on the Financial Secrecy Index,” said Green Party Co-leader Dr Russel Norman.

“Our secretive foreign trust regime and lax company registration requirements are damaging our international reputation.

“Anonymous shell companies and secret trusts are one of the most common ways of moving tainted money into the banking system.

“New Zealand’s foreign trust regime offers a legal vehicle for foreign criminals to hide wealth.

“Our lax standards and enforcement around company registration and resident directors continue to be exploited to register anonymous shell companies to facilitate crime, tax evasion, and fraud.

“National has done nothing to address the secrecy of our foreign trust regime and been slow to close our company registration loopholes despite full knowledge of the abuses occurring there. As a result, New Zealand was struck off the EU ‘White List’ in 2012 adding additional costs to New Zealand exporters doing business in Europe.”

The Green Party has offered to support the passage of the Companies and Limited Partnerships Amendment Bill through its remaining stages. The Bill will strengthen the company registration process. The Bill was introduced in October 2011 but has not been made a priority by National since Simon Power left office.

Dr Norman has also drafted a new law to address the secrecy loopholes that are easily abused in the New Zealand foreign trust regime.

“Transparency is the best remedy to ensure New Zealand foreign trusts are not being misused,” said Dr Norman.

“I have drafted non-controversial legislation that will impose a more rigorous registration and disclosure regime on New Zealand foreign trusts, effectively removing the secrecy provisions that make them so attractive to criminals and tax cheats.

“These measures will help restore international confidence in New Zealand’s reputation as a well-regulated and transparent place to invest and trade.”

Link to the 2013 Financial Secrecy Index:
http://www.financialsecrecyindex.com/introduction/fsi-2013-results

Link to draft legislation to require greater disclosure of New Zealand foreign trusts:
https://www.greens.org.nz/sites/default/files/income_tax_foreign_trusts_amendment_bill.pdf

ENDS

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