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Closing remaining foreign trust tax loophole not a priority - Government

Journalists at 1News and the NZ Herald have joined forces with hundreds of reporters around the world to investigate leaked documents exposing tax haven secrecy.

The 2016 leak prompted changes to NZ’s disclosure and transparency rules, and now, we’ll bring you more stories from the release of the Pandora Papers.

Source: istock.com

Closing a tax loophole that could be allowing global elites with foreign trusts in New Zealand to avoid paying tax is not a priority for the Government.

The Revenue Minister David Parker told 1News a small tax loophole for foreign trusts in New Zealand still exists, and acknowledged "the concern is that there could be some people who are paying no tax anywhere".  

"We don't think it's a risk to the New Zealand revenue base it's a question as to whether there's a fairness to the tax system overall internationally."

David Parker Source: 1 NEWS

Parker described the tax loophole as "small" and said it was nowhere near as big as it used to be.

However, with Covid-19 the Government has other priorities "so it hasn't been taken completely out of the (Government's) work programme but it's not a current priority". 

Speaking before the Pandora Papers release, Parker said the Government is confident the vast majority of "dodgy" people with foreign trusts in New Zealand "left town" after basic disclosure and transparency rules were introduced in 2017 following the release of the Panama Papers.

"It's pretty apparent that the whole foreign trust industry was based on some pretty dodgy people, doing dodgy things as was exposed by the Panama Papers," Parker told 1News last week.

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1News political reporter Benedict Collins explains. Source: Breakfast

"And of course, because we didn't have transparency as to who were the underlying beneficial owners of those trusts they could get away with doing that in New Zealand as soon as we had transparency or light was shone upon that and information sharing arrangements with other tax jurisdictions were triggered they just left town."

There were nearly 12,000 foreign trusts operating in New Zealand in 2016 before the Panama Papers.

Parker said there are now less than 2700.

The former National government moved at speed to pass the laws that saw greater transparency and disclosure introduced and its former revenue minister Judith Collins told 1News it’s “probably a good thing” that a lot of the foreign trusts decided to quit New Zealand following those changes.

She said National ran out of time to close the loophole given that year’s general election, adding the Government’s had four years to shut it.       

To see more details of the investigation, click here:

Factsheet:

What is it?

The Pandora Papers is the biggest worldwide collaboration between journalists and has uncovered millions of records exposing tax haven secrecy. It now encompasses 150 media partners and more than 600 journalists in 117 countries.

An anonymous source shared with the International Consortium of Investigative Journalists 2.94 terabytes of confidential financial files, amounting to more than 11.9 million documents and other records, from 14 offshore financial service providers that set up and manage shell companies and trusts in tax havens around the globe.

The investigation reveals the secret assets, covert deals and hidden fortunes of the super-rich - among them more than 130 billionaires - and the powerful, including more than 30 world leaders and totalling trillions of dollars.

The confidential documents also feature a global cast of fugitives, convicts, celebrities, football stars and others, including judges, tax officials, spy chiefs and mayors.

New Zealand’s involvement

Journalists at 1News and the New Zealand Herald have been trawling through the documents for months and will bring you the stories about those who have been operating foreign trusts right here in Aotearoa New Zealand.