Last year, the Panama Papers revealed that New Zealand is a tax haven, with secret foreign trusts used by foreigners to cheat taxes, launder money, and conceal ownership of stolen assets. In response, the government promised some weak reforms. And surprisingly, they appear to be working:
The Government adopted Shewan's recommendations and earlier this year introduced rules requiring people setting up or administering foreign trusts in New Zealand to reveal financial information and the identity of any beneficiaries.
The new regime requires all trusts to register with Inland Revenue by June 30.
These trusts, according to an Inland Revenue spokesman, must indicate whether they are going to stay registered in New Zealand and comply with the extra requirements.
Of the 11,750 foreign trusts in existence before the new rules were passed in February, only 66 have so far informed IRD they plan to register.
As at Thursday afternoon, 1838 had told the tax department they are not going to register under the new regime.
These trusts will no longer be able to operate as a result.
So it appears that the government's weak disclosure regime is too much for the international tax cheats, and may very well put our local money laundering industry out of business. Good riddance. Meanwhile, I'm glad to have been wrong about the impact. That said, the best defence against corruption is disclosure, and a public beneficial ownership register would still be a useful step in the global fight against corrupt officials and the cheating rich.
