We learnt today about a number of NZ Trusts owned by foreigners who are possibly using these trusts to hide their money. This way, they avoid paying tax in their own country.
This information came from the “Panama Papers”. Someone leaked information from a Panama law firm about foreign-owned trusts around the world. Panama is a tax haven, a country where rich people hide their money. NZ is not a tax haven.
The reason that foreigners use NZ in this way is because we are a stable country where their money is safe. The Minister for Inland Revenue said, “We tax people who live, work and do business in NZ. We do not tax foreign income earned by foreigners.”
However, the concern is that we may be helping criminals to hide their money. The Panama Papers show that people who hide their money in trusts are: the very rich, celebrities, sports stars, ex-politicians including dictators, and drug lords.
The Inland Revenue Department (IRD) said NZ shares information about trusts with partner countries. John Key said our tax system was reviewed by the OECD in 2013 and there were no problems.
Vocabulary
• a trust (n) – a legal organisation
• avoid (v) – find ways they don’t have to do something
• leaked (v) – gave information which was private
• haven (n) – a safe place
• stable (adj) – safe, no big changes in politics or finances
• drug lords (n) – people who control the illegal drug industry
• reviewed (v) – checked
• OECD – Organisation for Economic Co-operation and Development (34 countries)
I think it is avoiding the facts to state categorically that NZ “is not a tax haven”. That is decidedly a moot point at this time. As for John Keys protestations, there has been some high powered assessment which is of the view that NZ needed to tighten its disclosure requirements in order to garner some international respect. None of this suggests that New Zealand is “not a tax haven”.
Agreed that it would have been better to say that these were the words of John Key and the IRD. John Key is now suggesting some changes to the law.