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.