First listen to Foreign-owned Trusts.
When the Panama Papers were leaked by journalists, NZ was mentioned many times in those papers. The Prime Minister, at first, said that NZ was not a tax haven. However, he decided that a tax expert should look at our system of allowing foreign trusts to register in NZ. At the moment, these trusts do not have to give very much information except the name of the person who sets up the trust. Around the world, people are worried about illegal money laundering.
The tax expert said that our system is not strong enough. It is too easy to hide illegal money. He recommended that anyone setting up a foreign trust should have to give an ID, their foreign address, tax details and a list of those people who benefit from the trust. They also need to make an annual report.
Then there will be a register of foreign trusts which will be available to the police and the Department of Internal Affairs as well as to tax officials in other countries.
The Labour Party said this is a U-turn by the government because at first the Prime Minister said that laws for these foreign trusts set up were good enough. However, now the government admits the laws need to be tighter. The reputation of our country is important and we must not allow illegal financial activity.
Vocabulary
• money laundering – hiding “dirty money”, money from illegal activity, by using foreign banks or moving money around businesses
• U turn – a change in direct, going in the opposite direction
• admit – finally change their minds and agree
• reputation – our good name