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We were right, opposition parties say

NZ NewswireNZ Newswire 27/06/2016

© Getty Images Opposition parties say they were right to call for changes to foreign trust rules now an independent inquiry has found they're not strong enough to protect New Zealand's reputation.

Tax expert John Shewan was appointed to review the rules after the Panama Papers were released and his report was issued on Monday.

"The rules are not fit for purpose in the context of preserving New Zealand's reputation as a country that co-operates with other jurisdictions to counter money laundering and aggressive tax practices, it says."

"The inquiry considers that the disclosure requirements can be justifiably described as light-handed."

It says there's no direct evidence of illicit funds being hidden in foreign trusts in New Zealand, or of tax abuse.

"However, based on the work undertaken, including a review of IRD files, the inquiry considers it reasonable to conclude that there are cases where foreign trusts are being used in this way."

Labour's Grant Robertson says Prime Minister John Key's initial reaction to the Panama Papers was to defend the foreign trust industry.

"This report contradicts that stance," Mr Robertson said.

"John Shewan's report is a rebuke to John Key and the National Party."

The Greens say they've been calling for changes since 2012.

"The inquiry has found that foreign trusts are open to being abused," said co-leader James Shaw.

"Shewan's findings are a win for greater transparency around tax matters and for honest politics internationally."

Although the report finds the current rules aren't fit for purpose, it concludes that New Zealand isn't a tax haven under OECD criteria.

It recommends a raft of changes to tighten up the rules around foreign trusts, and the government says it intends implementing them.

The Panama Papers revealed details of hundreds of thousands of foreign trusts set up by law firm Mossack Fonseca

Foreign trusts are legal but they can be used for money laundering and tax evasion.

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