Panama papers: NZ to examine tax laws

It hasn’t taken long for John key to switch to damage control over the Panama papers. he has announced that the Government will get an international tax expert to ‘independently examine New Zealand’s tax laws in the wake of the Panama Papers revelations’.

Newshub – Key: Independent look at NZ tax law after Panama

The Government is hiring an international tax expert to independently examine New Zealand’s tax laws in the wake of the Panama Papers revelations

Prime Minister John Key told Paul Henry he’s taking a paper to Cabinet this morning proposing the appointment. Mr Key says changes may be necessary.

“We’re ranked in the top 20 in the world for disclosure,” he says.

“Trust firms have to know the source of their revenue and they have to keep good records as they are regularly audited.

“If there can be improvements, we’ll make improvements and we’ll get this independent voice to look.”

This is after Key defending New Zealand’s trus and tax laws last week in parliament – see “New Zealand is not a tax haven”.

Key doesn’t agree with Winston Peters’ call for a Commission of Inquiry (that Labour supports) – Labour supports Panama Papers inquiry

Winston Peters wants a full scale investigation into whether the country’s being used as a tax haven and Labour’s Andrew Little agrees.

“It’s an issue about us being set up in a way that prevents other countries from collecting their fair amount of tax, and we shouldn’t be party to that. It ought to be inquired into,” he says.

A Commission of Inquiry does seem premature with only vague New Zealand connections to the Panama papers so far and it being likely to take months to examine the Panama papers.

Time will tell whether the international tax expert move will be enough damage control – an expert will be open to questioning about their credentials.

In the meantime the opposition attacks on key continue.

The Standard: Key changed the law to turn NZ into a tax haven

The definition is pretty simple: “A tax haven is a state, country, or territory where, on a national level, certain taxes are levied at a very low rate or not at all.”

New Zealand is a tax haven. We became a tax haven in 2011 as a result of a law change directly instituted by John Key. Chapman Tripp – “New Zealand’s leading full service law firm” – helpfully explains:

A publication dated 10 october 2011:

New Zealand now an attractive tax location for offshore managed funds

Foreign investors in a New Zealand fund with only foreign investments will now bear no New Zealand tax on their income, whether or not the fund distributes that income. The tax change, which came into force in September 2011, should make New Zealand managed funds an attractive alternative to funds resident in Luxembourg, Ireland or the Caymans.

Robins at The Standard:

The proposal to change to 0% tax was the direct instruction of John Key

The change to 0% tax went ahead (here’s the IRD’s page on Foreign investment PIEs), at which point NZ became a tax haven. End of story.

He also links to “the secrecy aspects of havens” – see the earlier post by Deborah Russell.

Expect Key to try to damp down any potential damage, while the Opposition will no doubt see this as their next big thing to beat National over the head with.

It’s far too soon to know how this will play out.

Leave a comment

14 Comments

  1. jamie

     /  11th April 2016

    Prediction:

    The tax expert will make several recommendations around disclosure, ALL of which would need to be followed for any of them to be effective.

    The government will legislate to enact ~half of them which will be enough to placate local media and have the effect of opening new loopholes.

    The opposition will point this out and no-one will listen.

    Reply
    • Dougal

       /  11th April 2016

      FWIW, my prediction, sporting my tinfoil hat:

      National have information about donors to Labour’s campaign. Those donors MAY be in the form of “Chinese investors” looking for a bob each way with equal donations to both major parties. Those “investors” do indeed have ties too and trusts setup by Mossack Fonseca. National front foot it and bank the Labour association for a rainy day. Labour haplessly wonder into the debate and are outed after National declares arms length but unforeseen involvement. Labour goes into damage control, they are implicated in their own anti Asian policies and further self destruct.

      I wouldn’t want to put names to certain Asian donors but they certainly do spring to mind where concealing money is concerned.

      Tinfoil hat off. Move along, nothing to see here.

      Reply
    • Natty K

       /  11th April 2016

      It’s seems obvious that the government will not admit accountability, even they know they are in the wrong. My prediction is; more evidence will come out explaining New Zealands involvement and government will be in denial throughout the process.

      Reply
      • Dougal

         /  11th April 2016

        Why would you admit anything if nothing is wrong so far? The laws may need looking at but this does not imply involvement in illegal money laundering.

        Reply
    • Klik Bate

       /  11th April 2016

      The only people that will benefit from all this International Fraud, will be the corrupt Lawyers, Bankers, Judges, and of course the Politicians. These are the people that are ‘politically protected’ from wrongdoing and therefore immune from the consequences. When you have any system in place where a ‘worker’ on a respectable income actually pays more tax than a multi-national corporation – you know something is wrong.

      Reply
  2. alloytoo

     /  11th April 2016

    “The change to 0% tax went ahead (here’s the IRD’s page on Foreign investment PIEs), at which point NZ became a tax haven. End of story.”

    What utter rubbish.

    The principle is at New Zealand shouldn’t (or can’t) tax income that doesn’t originate in New Zealand. The tax change clarified that funds not originating in New Zealand or even present, but administered from NZ were outside the tax NZ net.

    Tax Havens encourage people to house their wealth in the tax havens with low tax rates and poor disclosure regimes. None of which applies to NZ.

    Reply
  3. Bob

     /  11th April 2016

    And right on cue Andrew Little wades in and immediately puts both feet firmly in his mouth… From Stuff “Opposition Leader Andrew Little said the Prime Minister was “far too cagey” when asked if he had used a tax haven for his finances.”

    If its good enough for the PM to be required to reveal all of his personal fiancial details then lets have it for ALL MP’s, can’t imagine that idea will thrill any MP’s, wouldn’t be surprised if Little is currently receiving a good ear bashing from all sides.

    Everybody has a right to a level of privacy and if there is anything in the Pamanma papers then it will come out in time, advocating a witch hunt before the details are out is wrong and presumes guilt with no evidence. The media will wind this up because… well they are stupid and desperate for relevance. Little is now firmly stuck, National have announced a review, will be able to defend the PM’s right to privacy and have to deal with the Panama papers as it unfolds, Litlle now either has to back down and defend the PM’s privacy rights or call for all MP’s to disclose all their financial details and face a open revolt from all MP’s.

    Reply
    • David

       /  11th April 2016

      Key isn’t foolish enough to release personal information like Cameron has, all it will do is create more avenues for questions and innuendo.

      Reply
    • jamie

       /  11th April 2016

      “If its good enough for the PM to be required to reveal all of his personal fiancial details then lets have it for ALL MP’s,”

      I agree, but isn’t that what the register of pecuniary interests is for?

      Does Key have his assets listed there? Or does his entry just name his secret trust?

      “can’t imagine that idea will thrill any MP’s”

      Probably not, but I hardly think it’s our responsibility to provide them with thrills 😉

      Reply
      • Dougal

         /  11th April 2016

        Key has a blind trust as did Helen Clark..it’s nothing new and not illegal.

        Reply
        • jamie

           /  11th April 2016

          I didn’t say it was illegal.

          I asked whether his assets are listed in the pecuniary interests register or just the trust.

          Reply
  4. David

     /  11th April 2016

    The way it will pan out is another 2% decline for Labour and the MSM who will do to death something that is nothing.

    Reply
  5. Zedd

     /  11th April 2016

    sounds like Key has stepped back, a tiny fraction.. from ‘nothing to see here’ to ‘could be something.. BUT no admissions are, likely forth coming’ (unless evidence is stuck up his nose) ?! 😦

    Reply
    • jamie

       /  11th April 2016

      Key has done a 180.

      Just 2 days ago he was saying NZ foreign trusts are totally transparent with full disclosure and that we are in no way a tax haven.

      Bill English was saying in parliament just this past Wednesday that it’s none of our business if people use NZ foreign trusts to avoid tax in other jurisdictions.

      Looks like DPF did some rapid polling over the weekend.

      Reply

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