WELLINGTON, New Zealand – New Zealand is poised to toughen its disclosure rules for offshore trusts in the wake of the massive data leak known as the “Panama Papers.”
Taxe expert John Shewan on Monday released a report recommending a big increase in the amount of information disclosed when a foreign trust sets up, as well as increased annual reporting requirements and enforcement.
Prime Minister John Key said officials need to review the government-commissioned report but he thinks most of the recommendations are reasonable and will be implemented.
The issue of offshore companies has been in the spotlight since April, when stories published by the Washington-based International Consortium of Investigative Journalists detailed how world leaders, celebrities and businesses were using offshore companies to hide money.
Public figures came under fire, including Iceland’s Prime Minister David Gunnlaugson, who resigned amid reports he set up a company in the British Virgin Islands that had holdings in Iceland’s failed banks.
The stories came after the leak of more than 11 million documents belonging to Panamanian law firm Mossack Fonseca.
The consortium of journalists identified New Zealand as among 21 tax havens used by the Panama firm. Key rejected the characterization of the country as a tax haven but said he was open to making changes.
In his report, Shewan said there was no direct evidence of illegal funds being hidden in New Zealand offshore trusts, or of tax abuse, but he thought it “reasonable to conclude” it was happening.
Shewan recommended the extra information about the trusts be made available to relevant authorities on a searchable register. He recommended the trusts, which don’t pay annual fees, be charged 500 New Zealand dollars ($354) each year for administration.
The opposition Labour Party said the report was a rebuke to Key, who had protected an industry which had damaged New Zealand’s reputation.