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New Zealand to review foreign trust disclosure rules

Monday, 11 April, 2016

The Auckland government has launched an independent review of disclosure rules covering foreign trusts registered in New Zealand, in light of the leaks from Panama law firm Mossack Fonseca.

Reports in Australian newspapers have suggested that New Zealand's foreign trust regime allowed Mossack Fonseca to create trusts in New Zealand to protect controversial assets on behalf of anonymous clients. The reports allege that New Zealand has registered 12,000-plus offshore trusts with unidentified beneficiaries and privately held accounts, though that information can be demanded by New Zealand's own regulators.

These reports led to clashes between Prime Minister John Key and the Labour Party opposition leader Andrew Little, who complained that foreign trusts do not pay NZ tax on their overseas income.

Finance Minister Bill English has now announced a new independent review of the country’s trust rules. It will be led by tax expert John Shewan, formerly of PricewaterhouseCoopers, to assess whether the existing foreign trust rules, enacted in 2006, require any 'practical improvements' regarding record-keeping, enforcement and the exchange of information with other tax jurisdictions.

'Our rules require foreign trusts to be registered and to keep detailed financial and other records, which can be requested by Inland Revenue and passed on to tax authorities in other countries', said Bill English. 'We are open to considering changes to disclosure rules if that is warranted.'

These rules 'enable New Zealand to cooperate with other tax jurisdictions, while not disrupting the legitimate financial transactions of foreign trusts', said Tax Minister Michael Woodhouse.

Shewan will report back by 30 June.

Sources