“New Zealand is not a tax haven”

In response to questions asked in Parliament yesterday  Prime Minister John Key has stated that New Zealand is not a tax haven as implicated in the Panama papers.

New Zealand is not a tax haven. Tax havens do not have the disclosure regimes that New Zealand has.

…we have the ultimate in disclosure…

New Zealand actually collates a great deal of information and it shares it with every jurisdiction that asks us.

Iceland’s Prime Minister has just resigned after embarrassing revelations.

Key in response to Winston Peters:

Rt Hon Winston Peters: Why since he has become the Prime Minister has there been a threefold increase in offshore trusts operating in New Zealand, were it not for the discovery internationally of just how lax our tax money laundering disclosure regime is?

Rt Hon JOHN KEY: That is not true. Tax laws around trusts were established in New Zealand in 1988. The disclosure regime change was implemented in 2006. Subsequent to that there have been a number of other things that have been done to improve aspects of trusts. In 2013 the OECD gave a report on New Zealand and fully cleared New Zealand.

Rt Hon Winston Peters: If that is the case, why, subsequent to that date he gave as the reason why we should be all relaxed about it, have the Ministry of Business Innovation and Employment and Treasury expressed their concern about the existence of tax haven activity in New Zealand, and why should we believe him and not them?

Rt Hon JOHN KEY: As I said, in 2013 the OECD gave New Zealand a clean bill of health. What has also happened is that New Zealand continues to work with the OECD about its base minimisation, but the Inland Revenue Department (IRD) regularly puts up a menu of options that could be looked at as part of its work programme. It was not the No. 1 priority for the Government at the time because, compared with other measures where we could have them working, it would actually be about collecting more tax for New Zealanders.

In response to Andrew Little and James Shaw:

2. ANDREW LITTLE (Leader—Labour) to the Prime Minister: Does he stand by his statement that New Zealand is not a tax haven because “New Zealand has full disclosure of information”, given Cone Marshall, a law firm specialising in establishing trusts for foreigners, says “The identity of the settlor need not be disclosed and the trust deed is not registered with any tax or Government authority” and “There is no obligation to file any trust accounts with any person or institution or to have such accounts audited”?

Rt Hon JOHN KEY (Prime Minister): Yes, because there is more than one step in the disclosure process. Initially, a New Zealand resident trustee must submit a foreign trust disclosure form, an IR607, which simply records the name of the trust and the trustee’s contact details. However, the trustee must also keep detailed financial and other records, including the trust deed; details of settlements and distributions, including the recipient’s name and address; details of the trust’s assets and liabilities; the identities of the settlors and the beneficiaries of the trust; and money that the trust receives and spends. The Inland Revenue Department can get this kind of information and will give it to the tax authorities in any other country if requested under a relevant tax agreement, or proactively if that country wishes. I am advised by the Inland Revenue Department that New Zealand has always been able to comply with these sorts of information requests from treaty partners. This is certainly full disclosure of information. The income in these trusts is quite rightly outside our tax base. It is foreign income earned by foreigners. It is up to other tax authorities around the world to enforce their own tax laws on this income and on their own residents. We can help them do that by providing detailed information to them on request about trusts that are administered from New Zealand. I make the second point, which is that we automatically disclose that information to Australia. It is the one jurisdiction that has asked us; no other jurisdiction has. These disclosure regimes, which by any definition are broad and deep, were the ones passed by the Labour Government in 2006. [Interruption]

Andrew Little: Is he seriously telling the House that the only obligation that a foreign trust is obliged to make, which is completion of an IR706 form and nothing else, constitutes a full disclosure regime for this type of vehicle?

Rt Hon JOHN KEY: For a start off, it is an IR607 form, not an IR706 form. And, secondly, as I pointed out in the answer, which was very long and very detailed, that is but the starting point, which requires them to keep hugely detailed information of what is in there and report that when required. Those are the rules that Labour thought were right when it passed this disclosure in 2006. If the member is now telling us that Labour got it wrong, he should get on his feet and apologise.

Andrew Little: Why has he failed to heed the warnings from the New Zealand Law Commission, the Chartered Accountants Australia and New Zealand, the OECD, and the Inland Revenue Department that New Zealand’s weak offshore tax laws allow wealthy foreigners to subvert laws and dodge taxes?

Rt Hon JOHN KEY: I am prepared to accept that I made one mistake, and that is relying on Labour. It passed the rules.

Andrew Little: Can he guarantee that no offshore trusts registered in New Zealand are being used to hide illegally obtained assets or dodge tax?

Rt Hon JOHN KEY: No Prime Minister can give that assurance any more than Helen Clark could have when this law was passed, no doubt with the support of David Parker, in 2006. What is quite clear is that New Zealand gives all of that information, not only to Australia but to any jurisdiction that asks for it. We have been able to comply with every jurisdiction that has asked. I also note that we have 40 double tax agreements and 11 information-sharing agreements, one of which includes Malta.

Andrew Little: What effect does he think it has on New Zealand’s reputation when we are viewed as a tax haven harbouring billions of dollars, and his only reaction is to boast that it earns us $24 million a year in lawyers’ fees and accountants’ fees?

Rt Hon JOHN KEY: New Zealand is not a tax haven. Tax havens do not have the disclosure regimes that New Zealand has. [Interruption] Well, it is as simple as this: if it is such a bad idea, it was Labour in 1988 that passed the trust legislation, it was Labour in 2006 that had—

Andrew Little: How does he expect to go to international forums and stop multinational corporations dodging their New Zealand tax, when he is letting foreign tax-dodgers use New Zealand as a tax haven?

Rt Hon JOHN KEY: Firstly, I believe the latter part of the question from the member to be wrong. Secondly, in all of the international forums that I have been in, in the nearly 8 years that I have been Prime Minister, no one has ever raised this issue with me. I am not aware of them ever raising it with a Minister of Revenue, and, as I said in 2013, New Zealand was given a clean bill of health by the OECD.

James Shaw: Does he acknowledge that the Inland Revenue Department said in 2013 that “our foreign trust rules continue to attract criticism, including claims that New Zealand is now a tax haven in respect of trusts.”?

Rt Hon JOHN KEY: I have not seen the particular quote, but, as I said earlier, the Inland Revenue Department has come up with a whole range of things it wants on the work programme, and I would have thought the most important thing was making sure that New Zealanders actually pay their fair share of tax, and that has been the priority.

James Shaw: Is he disagreeing with Inland Revenue Department’s advice in 2013 that the way forward is to strengthen our disclosure and reporting requirements with New Zealand foreign trusts?

Rt Hon JOHN KEY: What the Government is doing is working with the OECD on its base erosion programmes. It is quite happy to take advice and suggestions from others and, over time, there may be arguments about things we could strengthen. But if you look at what the requirements are under IR607, they are extremely broad and deep.

James Shaw: So is he opposed to greater transparency for New Zealand foreign trusts, when greater transparency will only hurt people using foreign trusts for illegitimate purposes?

Rt Hon JOHN KEY: Clearly not, because we have the ultimate in disclosure when it comes to Australia, because we give it full disclosure without even making reference to the Australians, because they ask for it. We would do it for any other jurisdiction that asked us to do that. If any country wants to come to New Zealand and have the same requirements as Australia has asked us for, we will provide it with all that information. As I said in my answer to the primary question, which was quite long, New Zealand actually collates a great deal of information and it shares it with every jurisdiction that asks us.

No doubt questions will continue to be asked.

 

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50 Comments

  1. Klik Bate

     /  6th April 2016

    Reply
    • Gezza

       /  6th April 2016

      Hahahaha – look at the number of up ticks on this. General agreement in most camps?
      😎

      Reply
      • Kitty Catkin

         /  6th April 2016

        No-nobody’s forced to use any given bank and I don’t know any that are owned by one person. My bank pays me interest on deposits, which seems an odd thing for robbers to do.

        Reply
      • Kitty Catkin

         /  6th April 2016

        Surely it’s been implied that NZ’s involved-we haven’t been implicated, which means a very different thing. Someone who’s implicated is guilty.

        Reply
        • Clemgeopin

           /  6th April 2016

          NZ, the land of the long white clouds, the clean-green, non-corrupt, Gods-own country, is just a pure, ethical and completely innocent, squeaky clean enabler for wealthy crims, rich pricks, big business, crooks and dodgers from around the world. Thats all. Cool bananas.

          Reply
          • Alan Wilkinson

             /  6th April 2016

            NZ’s far, far down the list of those. But don’t let that spoil your grizzle. I know you won’t be happy unless you can find something to be unhappy about.

            Reply
            • Kitty Catkin

               /  6th April 2016

              Not to mention people to be envious of ! It seems that some people can’t accept that other people have made money honestly, and have to convince themselves that it was made by dishonest means.

            • Clemgeopin

               /  6th April 2016

              Do you think all those bastards, including tax dodgers, crims, money gamblers and drug pushers ‘have made their money honestly’? If that is true and they are ‘honest’ then why the heck are the arseholes trying to secretly hide it all somewhere else?

              I am not ‘envious’. Not in the least, No matter how rich the rich prick is. But I just dislike crooks, dodgers, inconsiderate selfish bastards, thieves and liars.

  2. alloytoo

     /  6th April 2016

    The opposition are falling over themselves to have a go at the government over this, begs the obvious question, after so many years in opposition why haven’t they addressed this before?

    Reply
    • What is even more compellling is that the rules were written by Labour in 2006 under Helen Baby, and Cullen prick. I am still laughing, particulrly at the conterfiet concern of dear old Olive.

      Reply
      • Oliver

         /  6th April 2016

        Save the opinions to the experts and go back to what you are good at, flipping burgers.

        Reply
  3. Alan Wilkinson

     /  6th April 2016

    The Left’s greed for other people’s money has no bounds.

    Reply
    • alloytoo

       /  6th April 2016

      What I find particularly disturbing is that no one appears concerned about this blatant invasion of privacy without due process. The Greens in particular seem very eager plaster to plaster the person details of trusts, trustees, donors and beneficiaries all over the place. These were the same people who squealed like stuffed pigs over the GCSB legislation, and rant and rave every time there’s an occasion privacy breech from a government agency. The hypocrisy is staggering.

      Reply
    • Oliver

       /  6th April 2016

      Are you supporting terrorism and money laundering Wilky? I suppose in a capitalist society even criminals have the right to get rich.

      Reply
      • alloytoo

         /  6th April 2016

        Olly

        Last I noted, we had separate laws for trust administration, Counter Terrorism intelligence gathering and money laundering.

        I would suggest that it would be more productive to address your concerns the legislation pertaining to the later two.

        Reply
        • Brown

           /  6th April 2016

          … blatant invasion of privacy without due process.

          Privacy is long gone. I recall once, not so long ago, it was worth fighting for. I guess people of an earlier generation had seen how governments that have access to everything and complete control behave and saw that it was bad. How quickly we forget.

          Reply
      • Alan Wilkinson

         /  6th April 2016

        No, I’m supporting intelligence, Oliver, and personal privacy within the bounds of respecting the law. I realise that is far too subtle for the Left.

        Reply
        • Kitty Catkin

           /  6th April 2016

          What is wrong with legally being a tax haven like the Channel Islands and, I think, Monaco ? It doesn’t mean criminality as some people seem to think.

          Reply
    • Lurcher1948

       /  6th April 2016

      It’s all right when the right do it

      Reply
  4. Oliver

     /  6th April 2016

    Heres a question worth pondering. Make sure your’e sitting down when you read this.

    The question is has Key himself benefitted from this? The Icelandic PM has been caught out having a trust in the very banks he was supposed to be legislating against. Does John Key have a conflict of interest in keeping trust law murky because he has two ‘blind’ trusts? – Daily blog

    Reply
    • Kitty Catkin

       /  6th April 2016

      Here’s a question worth pondering; is there any chance of Oliver saying anything accurate or intelligent ? Or, for that matter, literate ?

      I’d advise caution about implying that sort of thing about someone, Oliver, unless you have proof, which you obviously haven’t. You’re probably too small for John Key to worry about, but watch your step-I can’t pretend that I’d be sorry to see you getting what’s coming to you, but I don’t like people being smeared with your slime.

      Reply
  5. Oliver

     /  6th April 2016

    Sums up the situation quite nicely

    John Key may easily have money stashed away, out of the prying eyes of the IRD or Kiwis in general, in some blind trust on the Caymans or Bermuda, but of course it won’t be in New Zealand. And, although it might not be moral, it won’t be illegal. The point is that these people already have the system by the short and curlies: they don’t need to break any law that can be calibrated at will to suit their requirements.
    An example of this is the recent law modification on insider trading and price collusion. Unlike in the rest of the Western World, here it isn’t an offense punishable by jail time. No, here, if discovered, it is subject only to a fine. In other words, the customers, socked by fixed prices now also have to also pay any penalties that might be imposed. Some deterrent!
    John Key, as water carrier for the internationalist corporate take-over we call the neo-liberal revolution, has a clear path. If he can get away with it, he will leave the law as it is. If the heat gets too great, he might choose to modify the law leaving a few loopholes. failing that, he will try to stall as long as possible in the hope that the media will notice a squirrel somewhere else. His plans require that we remain a slightly shady, but legal under local rules, tax haven
    I think we can still allow that Key imagines that what he is doing is good for New Zealand. His dream of New Zealand becoming the Switzerland of the South: the playground of the wealthy as they frolic near their wealth, must seem attractive to both himself and possibly Max (as the family frolicker-in-chief). But the dream comes a bit into the category of “what is good for General Motors is good for America”. Worse, the myopic corporate attitudes he has brought along with him from Wall Street are showing signs of corrupting the heart of his constituency.
    It is possible that we may not recover in the near future from the damage he is inflicting on our international reputation and I believe we all may live to regret this over time.
    Helen may regret it a little sooner.

    Reply
    • Alan Wilkinson

       /  6th April 2016

      Trash, the only “loophole” so far identified is for foreigners whose law allows them to create non-taxable overseas administered trusts. The fix is for those countries to fix their laws. NZ can’t do it for them. Key has one family trust and one blind trust as required by Parliamentary rules. The writer doesn’t bother to inform himself before launching into an rant.

      So who is it? Oh, Martyn Bradbury of course. Hyped ignorance.

      Reply
      • Gezza

         /  6th April 2016

        I kind of like him in some ways. I have an inexplicable fondness for hyperventilators.

        Reply
    • Kitty Catkin

       /  6th April 2016

      Oliver is a slithy tove and a nasty, jealous little person who can’t believe that anyone who’s more successful than he is (I.e. almost everyone) has done it honestly. He has a 1/2 horsepower brain pulling a two ton mouth.

      Reply
      • Kitty Catkin

         /  6th April 2016

        Three downvotes ! He must have two admirers or have been told how to manipulate the up and down voting.

        Reply
  6. Klik Bate

     /  6th April 2016

    No wonder Bernie had problems finding financial backers from within the ‘Wall Street Establishment’…….Hillary, not so much.

    Reply
    • Alan Wilkinson

       /  6th April 2016

      Yet the Panama papers seem to have identified no notable American clients. How strange?!

      Reply
      • Lilly Franks

         /  6th April 2016

        The files were dished out to teams working on each country, there is a mammoth amount of data to get through the US stuff will come in time. Snowden’s leak was a fraction the size of this and a year down the line information was still trickling out. If everything came out at once, nothing would make a real impact.

        Reply
        • Alan Wilkinson

           /  6th April 2016

          There has been plenty of speculation on the American void. Data filtering has to be a top candidate and I don’t believe for a moment that has happened at the journalist end of the hack.

          Reply
          • Lilly Franks

             /  6th April 2016

            Yer tin-foil’s slipping.
            Or.. Maybe Mossad is protecting it’s ally?

            Reply
            • Alan Wilkinson

               /  6th April 2016

              I don’t see a Mossad motive yet. American more likely.

              Also previous bank leakers wanted money for the risk they took. This one didn’t. So it is very political and/or very well funded.

            • Lilly Franks

               /  6th April 2016

              You said it HAD to be Mossad yesterday, or the secret service.
              Now it’s an inside leak by a patriotic American?
              You underestimate the ‘kid in the basement’.

            • Gezza

               /  6th April 2016

              You underestimate the ‘kid in the basement’.

              So did I. I’ve been looking for that little bugger, he owes me two months’ rent.

            • Alan Wilkinson

               /  6th April 2016

              @Lilly, no, I don’t say it is an inside leak by a patriotic American. I do think it is an American or pro-American hit and I do think the kid in the basement scenario is low on the probability list. I think big money or big government is most likely behind it. It could be an inside mole but my guess is an external hack.

              Either that or Mossack Fonseca has a really, really bad enemy.

            • Lilly Franks

               /  6th April 2016

              For a start it’s been revealled as a hack, so NOT a leak. Second this is Big Money and Big Governments secrets that are being dished up, so probably not them which leaves your garden variety hacker. Let’s face it though, just like Rawshark the truth will never come out.

            • Corky

               /  6th April 2016

              I find it hard to believe it was a hack unless this firm was incompetent. Usually in these firms such information is held in a stand alone mainframe. Any information needed is transferred by disc or other portable device to the standard mainframe only when needed. The transfer device is then destroyed along with relevant entries. These mainframes are protect by massive security and armed personnel.
              If it was a hack, and this company had a stand alone mainframe, it must have involved social engineering and should be considered one of the best hacks of all time.

            • Alan Wilkinson

               /  6th April 2016

              Yes, I saw one of the company principals was reported as saying it was a hack but no evidence was given so I would treat that as uncertain.

              Could it be the IRS who have kept back the US cases for its own use and released the others? The few US names released might be overseas resident.

            • Alan Wilkinson

               /  6th April 2016

              Another possibility is that the data is compiled from US-captured communications and databases and as US citizens are protected by law from broad NSA surveillance their data has had to be filtered out.

      • Klik Bate

         /  6th April 2016

        It was reported yesterday, that whilst news on Americans implicated in the Panama Papers scandal has been scarce, early reports show that over some 210 names included in the leak correspond to US addresses.

        Watch this space……??

        Reply
  7. Zedd

     /  6th April 2016

    just listening to the general debate;

    (paraphrase) NZ inc. is increasingly looking like a suburb of Wall St.’ run by ex-Wall St’r, (Key & his cronies) for Tax dodging Wall St’rs, & inviting anyone else FROM Wall St. etc. to hid their excess dosh here (tax-free)

    BUT is that the ‘Kiwi way ?’
    “NO !!!” sez I&I “thats the f@cking Wall St way” 😦

    Reply
    • Gezza

       /  6th April 2016

      Wall Street Shuffle. This has always been such a cool song, great video too.

      Reply
  8. Klik Bate

     /  6th April 2016

    According to Raj at the dairy, he reckons the ‘Indian Connection’ to all this is very interesting.

    He put me onto this site…..

    http://indianexpress.com/article/india/india-news-india/panama-papers-panama-papers-india-niira-radia-mossack-fonseca-set-up-firm-linked-to-niira-radia/

    Reply
    • Clemgeopin

       /  6th April 2016

      There seems to be a lot of well dressed corrupt and dodgy rich prick rogue buggers all over this planet! The world needs a quick clean out! A spring clean. Who is going clean this dirty filthy shit and bell these criminal cats? The governments or the people themselves?

      Reply
      • Nelly Smickers

         /  6th April 2016

        Hmm, interesting alright. But certainly doesn’t surprise me none about the ‘Indian Connection’!

        Our corner dairy has been owned by the same Indian family for ages, and every time I go in there I see them putting their thumbs on the scales when they weigh something out.

        Wouldn’t mind betting they’ve even got their own hotline to Mossad Fonseca 😕

        Reply
        • Clemgeopin

           /  6th April 2016

          “every time I go in there I see them putting their thumbs on the scales when they weigh something out.”

          Oh dear! They still use those unbalanced dodgy beams? What stuff do they weigh? Bread and milk? No electronic scales?

          Reply
          • Nelly Smickers

             /  6th April 2016

            Of course I don’t mean they weigh bread and milk! You go to Countdown for that sort of stuff anyway, so the expiry date is still valid..

            I’m talking about when you want some bags of those loose nuts or Indian spices or lollies or something from those plastic bins with the little scoop.

            Doesn’t sound like you’re into ethnic cuisine?

            Reply

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