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Foreign trust rules to be tightened

NZ NewswireNZ Newswire 13/07/2016

The government is acting on all the recommendations from tax expert John Shewan's inquiry into foreign trusts.

Mr Shewan's report was released last month and it made a number of recommendations around improving registration and disclosure of information, anti-money laundering rules and increased information sharing between government agencies.

Finance Minister Bill English says Mr Shewan's recommendations are sensible and well-reasoned.

"By acting on all of them, we will ensure that our foreign trust disclosure rules are strengthened and New Zealand's reputation is protected," he said.

The government intends introducing legislation next month that will require, among other things, a register of foreign trusts that is searchable by Internal Affairs and the police, and annual disclosure requirements.

The government commissioned Mr Shewan to conduct the inquiry after the release of the Panama Papers, which revealed details of hundreds of thousands of foreign trusts set up by law firm Mossack Fonseca.

New Zealand was mentioned numerous times, and opposition parties accused the government of allowing New Zealand to be used as a tax haven.

Mr Shewan concluded that it wasn't a tax haven, but he said the rules were "not fit for purpose in the context of preserving New Zealand's reputation".

The regime, he said, could be "justifiably described as light-handed".

The government has agreed to implement all 14 recommendations either in full or with what ministers describe as tweaks.


* A register of foreign trusts, searchable only by regulatory agencies, will be set up

* IRD must be given details of non-resident trustees and beneficiaries

* Foreign trusts must file an annual return with IRD

* There will be stronger rules around the reporting of "suspicious transactions"

* There will be a review of information-sharing between agencies

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