WELLINGTON, NEW ZEALAND (MAY 9, 2016) (TVNZ) – Wealthy Latin Americans are using secretive, tax-free New Zealand shelf companies and trusts to help channel funds around the world, according to a report on Monday (May 9) based on leaks of the so-called Panama Papers.
Pressure is mounting on Prime Minister John Key to take action after local media analysed more than 61,000 documents relating to New Zealand that are part of the massive leak of data from Mossack Fonseca, a Panama-based law firm.
The papers have shone spotlight on how the world’s rich take advantage of offshore tax regimes.
Mossack Fonseca actively promoted New Zealand as a good place to do business due to its tax-free status, high levels of confidentiality and legal security, according to a joint report by Radio New Zealand, TVNZ and investigative journalist Nicky Hager.
Key said it was “utterly incorrect” that New Zealand was a tax haven, adding he was open to changing rules around foreign trusts if advised by a review or the OECD (Organisation for Economic Cooperation and Development).
“The government takes the issue seriously and we’ve called for a review of disclosure rules for foreign trusts by tax expert, John Shewan,” he said.
“As I’ve been saying for sometime now, if there’s any need for change in this area, the government will consider it and if necessary take action. By way of summing up, it’s important to note the existing rules already require foreign trusts to be registered and to keep detailed financial and other records. These can be requested by Inland Revenue and passed onto tax authorities in other countries,” he added.
The New Zealand government said last month it would begin a review of its foreign trust laws after the Panama Papers highlighted vulnerabilities in its legal framework that made it a possible link in international tax avoidance structures because its foreign trusts are not subject to tax.
Governments across the world have begun investigating possible financial wrongdoing by the rich and powerful after the leak of more than 11.5 million documents from Mossack Fonseca.
According to the report, Mossack Fonseca’s main contact in New Zealand was allegedly Roger Thompson, co-founder and director of accountant firm Bentleys New Zealand, the registered office of Mossack Fonseca New Zealand.
Thompson was listed in more than 4,500 Panama paper documents, the report said.
The number of foreign trusts in New Zealand has surged to almost 10,700 this year from less than 2,000 ten years ago, according to Inland Revenue figures quoted in the report.