According to a report on Monday based on leaks of the so-called Panama Papers, wealthy Latin Americans are allegedly using secretive, tax-free New Zealand shelf companies and trusts to help channel funds around the world
Pressure is mounting on Prime Minister John Key to take action after local media analyzed 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.
“If there’s any need for change in this area, the government will consider it and if necessary, take action,” Key told reporters.
The government was asking the Ministry of Justice to move quickly on rules already under consideration to tighten anti-money laundering requirements for lawyers, real estates and accountants, he added.
Opposition Labour Party Leader Andrew Little said the government must act to “preserve New Zealand’s reputation by shutting down the system that sees our country implicated in a massive global network of tax avoidance.”
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.
Green Party Co-leader James Shaw said that review doesn’t go far enough. He called on Key to “stop defending the tax avoidance industry” and demanded a full inquiry.