New Zealand’s Tax Transparency Model

Recent media coverage about New Zealand’s foreign tax trusts makes it sound as if it is a tax haven. However, OECD maintains that New Zealand is not a tax haven, never has, and is unlikely to feature on it. Tax havens impose only nominal taxes, lack transparency, and their tax procedures inhibit the exchange of information with other governments. As such, New Zealand does not qualify on any of the grounds above. Furthermore, their private banking industry is not secretive as perceived. New Zealand featured on OECD’S white list of the countries that complied with the internationally agreed tax standard.

Over the years, New Zealand has been handling foreign tax trusts with transparency. Therefore, New Zealand’s tax system allows other government to access relevant information. The new tax rule in New Zealand was introduced by Michael Cullen in 2006 after extensive consultation. Under this regime, trustees of a foreign trust are required to submit IR607 form and comply with the New Zealand’s tax authority. These financial records include trust deeds, details of trust’s assets and liabilities, distribution and settlement details, and the amount of money spent and received by the trustee. Notably, all records must be recorded in English and kept in New Zealand. Failure to comply with the requirements attracts hefty penalties.

About Cone Marshall

Cone Marshall is a New Zealand’s leading global-scale Trust, Estate, and Tax Law Firm. Located in Auckland, Cone Marshall Law Firm was founded in 1999 by Geoffrey Cone and Karen Marshall. Before joining Cone Marshall, Karen Marshall worked in London’s Commercial Litigation department for ten years. As an advisor to statutory trustee companies, Karen Marshall has an extensive experience in managing trusts. Conversely, Geoffrey Cone is described as one of New Zealand’s top tax lawyers in a NZ article written May 2016.

In an article posted on Twitter, Google+ and Facebook, Mr. Cone discredits the notion that New Zealand’s tax transparency model was somehow a tax haven and with a secretive private banking industry. Instead, Cone pointed out that New Zealand subscribed to the principals embodied in the gold standard for transparency. Explaining why New Zealand’s foreign trusts have increased, Mr. Cone said that New Zealand is internationally recognized as a safe country with a well-structured judiciary and substantial legal and professional infrastructure. New Zealand’s reputation as a safe place for investment has led to the increased foreign trusts.

Leave a Reply