New Zealand’s PM faces pressure over ‘tax haven’ status

New Zealand Prime Minister John Key insisted that his country is not a tax haven and that there is no need to change its tax laws, as pressure mounted on him in the wake of the Panama Papers leaks.

Papers leaked on Sunday from Panama-based Mossack Fonseca mention over 214,000 trusts and companies that are being used for tax avoidance purposes.

As had already been revealed, the papers show that Malta’s energy and health minister Konrad Mizzi and OPM chief of staff Keith Schembri used Mossack Fonseca to create their own companies, Hearnville and Tillgate respectively.

They then set up offshore trusts in New Zealand, to whose trustees they transferred ownership of their Panamanian companies.

Key is now facing pressure at home from opposition parties who have warned that the papers prove New Zealand’s status as a tax haven.

 “If we’re being billed around the world as a safe place to have these dodgy trusts and to avoid tax, that is not good for New Zealand and our reputation,” Labour leader Andrew Little said. “We need to know what the Prime Minister knows and what the government is going to do about it.”

He said that New Zealanders needed to know that the way the tax system operated would not encourage people to look at New Zealand as a tax haven.

“For foreign interests who want to use these mechanisms to conceal what they’re doing – that would just be totally wrong for New Zealand.”

Little said that the problem was likely a combination of how easy it is to set up a company in New Zealand, and the Inland Revenue Department not monitoring trust activity vigorously enough.

“I’ve seen ample reports that talk about how easy it is to set up a company and set up other legal vehicles in New Zealand and at one blush you could say ‘oh that’s good, easy to do business’ – actually then it becomes easy to do dodgy business.

“And it’s not good for New Zealand to have a reputation as a place to conceal dodgy business, so we’ve got to get out of that.”

New Zealand First leader Winston Peters warned that “dirty money” is being washed through New Zealand to evade tax and “conceal other serious financial and taxation manipulation”.

“Whilst the Prime Minister has been shaking hands with devious financial operators around the world and promoting our tax system, and doing little to ensure its integrity, we are no known as one of the world’s ‘quiet tax havens’ as the leaked documents reveal.”
Green Party finance spokesperson “Julie Anne Genter said that the time has come to “break open” New Zealand’s foreign trust industry to help fight global tax evasion.

“New Zealand is today being described as the ‘quiet little achiever’ as a tax haven for criminals,” she said.

However, Key brushed off concerns that his country is a tax haven.

“New Zealand has had the same tax laws when it comes to trusts since 1988, they were reviewed by the OECD in 2013 and they gave New Zealand a clean bill of health,” he told reporters on Monday. “We also have extensive disclosure regimes and we are signatories to a network of treaties.”

He said that tax havens are tax havens are places where there is non-disclosure of information.

“New Zealand has full disclosure of information…we have a quite legitimate regime, we disclose that information through our anti-money laundering laws.”

Inland Revenue minister Michael Woodhouse said it’s “ridiculous” to suggest New Zealand is a tax haven.

“We tax people who live, work and do business here. We don’t tax foreign income earned by foreigners,” he said. “Our tax rules require foreign trusts to be registered.”