A review of New Zealand's foreign trust laws by a tax expert has been slammed as a charade by opposition parties.
Amid continuing fallout from the so-called Panama Papers, Prime Minister John Key backed down today and, after approval from Cabinet, appointed former PricewaterhouseCoopers chairman John Shewan to review trust disclosure laws.
Mr Key maintained that those who referred to New Zealand as a tax haven were being "ridiculous", saying there wasn't the secrecy required to meet such a definition, as New Zealand would share information on trusts with other countries.
"It's very different from places where they are true tax havens and they are a locked box and they won't give people information."
However, he said the Government was open to making changes if recommended by Mr Shewan - who reports back by June 30 - or the OECD which is also looking at the issue.
And if information came out through the Panama Papers release about individuals that warranted further investigation, authorities would likely investigate.
"And if there are broader learnings from the Panama Papers when they come out ... the Government is not ruling out going out and making further changes.
"I think John Shewan is recognised as being an absolute expert ... he is very well respected, he is lecturing at Victoria University. He is a person who understands this."
New Zealand First leader Winston Peters disagreed, and said Mr Shewan's involvement in certain high-profile tax cases, including one advising Westpac in a major tax avoidance case it lost to Inland Revenue, meant he was an unsuitable "soft option".
Labour leader Andrew Little said a full, independent inquiry was needed with the power to subpoena witnesses, and called today's move by the Government a "charade".
"Any inquiry must also be given adequate resources so it can fully examine the 60,000 times New Zealand is mentioned in the Panama Papers."
Transparency International New Zealand has called for any review to be undertaken with the help of expertise from an overseas expert.
The leak of more than 11 million documents from Panama-based law firm Mossack Fonseca drew attention to New Zealand's tax-exempt foreign trusts, which have been reported to be attractive to offshore investors because of minimal disclosure requirements.
The documents showed that a senior Malta politician and a Mexican tycoon had opened trusts in this country.
Today the Australian Financial Review reported that in 2012 Mossack Fonseca's New Zealand staff reported advice they received from an executive at Nexus Trust: "NZ has very weak laws in regard to due diligence; they only require utility bill and passport. Trust companies are not required to hold a licence."
Inland Revenue is sending a staff member to attend an OECD meeting in Paris, called to consider issues raised by the Panama Papers.
Asked why New Zealand would not simply shut down foreign trusts, Mr Key said there were many reasons why people would legitimately have a foreign trust.
New Zealand's foreign trust laws
• 1988: Tax changes established rules around foreign trusts that are largely in place today.
• 2006: Changes to disclosure rules for foreign trusts - such as trustees having to have some financial details available if demanded by the IRD - brought in with law change, backed by Labour, National, and NZ First. The Greens and Maori Party abstained from voting.
• 2013: The IRD warned in a tax policy report about the reputational risks related to foreign trusts. Then Revenue Minister Todd McClay consulted on the issue at the time, but work was not progressed as the department already had a large work programme.
• Today: Government confirms an independent expert will review New Zealand's foreign trust laws, after the leak of the Panama Papers drew attention to New Zealand's tax-exempt foreign trusts.
PM: No disclosure of tax records needed
Prime Minister John Key says he has never used a foreign trust and is "100 per cent confident that my tax affairs are both absolutely above board and totally clean".
Mr Key was today again asked about his financial arrangements, after Labour leader Andrew Little suggested he could have something to hide, and British Prime Minister David Cameron was caught up in the Panama Papers controversy.
Mr Key said he was totally confident about his own tax affairs.
"I am quite confident that they are above board, and beyond reproach. I pay my taxes, there is nothing secret out there."
Mr Cameron on Sunday released information from his tax returns for the past six years, and in doing so said he had failed to properly handle questions about his inheritance from his father.
The information release came after information contained in the Panama Papers showed Mr Cameron's father was a director of an offshore trust.
Mr Cameron insisted that neither he nor his father had done anything illegal, and that all taxes due had been paid on proceeds from the fund and on the inheritance.