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Govt `swallowing a dead Panamanian rat'

NZ Newswire logoNZ Newswire 11/08/2016
Grant Robertson was the favourite to win the Labour leadership. © Getty Images Grant Robertson was the favourite to win the Labour leadership.

The bill that will tighten the rules around foreign trusts has passed its first reading in parliament after another opposition attack on the government over the Panama Papers.

The changes were recommended by tax expert John Shewan, appointed to review existing legislation following the release of the Panama Papers.

They revealed details of hundreds of thousands of foreign trusts around the world, and New Zealand was mentioned numerous times.

More than 11,000 have been set up in New Zealand.

Mr Shewan concluded New Zealand wasn't a tax haven but its rules were light-handed.

The government accepted all his recommendations.

"This bill is the swallowing of a very large, dead, Panamanian rat," Labour's Grant Robertson said.

"This bill is the government coming to parliament and saying `three years ago, when IRD told us we should be doing something to close the loopholes, and we ignored them, we were wrong'."

The Green Party's Julie Anne Genter said the government had dragged its feet after the Panama Papers were released, and had said there wasn't a problem.

"It took sustained questioning from the media and opposition parties for the government to make these changes," she said.

NZ First MP Fletcher Tabuteau said the papers had shown how easy it was for individuals and corporations to use New Zealand to hide their wealth.

"This is reality as the world sees us, as a tax haven, and we are being abused," he said.

Revenue Minister Michael Woodhouse put the changes into a wider tax bill, already in the pipeline, that simplifies processes, reduces compliance costs and makes GST rules more business-friendly.

It passed its first reading by 108 votes to 12.

NZ First opposed it, saying the foreign trust rule changes were a half-measure.

The bill has been sent to a select committee for public submissions.

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