Larry Williams: Govt must close down offshore trust rort

Image / iStock

Opinion

Listen to Larry Williams on Newstalk ZB from 4pm to 7pm. Today he looks at claims NZ acts as a tax haven.

Prime Minister John Key is defending the New Zealand tax system, saying it's not a tax haven. This assertion is borderline at best.

If offshore trusts are being used to evade tax or to hide assets, then New Zealand is complicit and is being used as something akin to a tax haven.

It defies belief that more than 12,000 offshore trusts that are registered in New Zealand are all for legitimate reasons. Who really believes they're legitimate? Not me.

It's far more likely these offshore trusts are being used to not just evade tax in the trustee's country of residence, but can also be used to launder money from ill-gotten gains.

It's breathtaking that our authorities have allowed this kind of illegal activity oxygen.

These offshore trusts are established here for very good reason, New Zealand is off the radar, we have a good reputation, and we are not viewed as a tax haven - we are viewed though, as a soft touch.

New Zealand's disclosure laws are weak. Professor Craig Elliffe, a tax law specialist at Auckland University, said, "The law is almost dangerously weak".

New Zealand's Foreign Trust laws don't require public disclosure of the trust's accounts, so it doesn't get much better if you're a crook and hiding assets.

It's so good, trusts in tax havens like the British Virgin Islands are being replaced with NZ trusts.

Revenue Minister Michael Woodhouse told me New Zealand is not losing tax revenue as a result of these offshore trusts.

That is true, but doesn't mean we should take a blasé attitude to these rorts. The Government has an obligation to plug the loopholes.

Watch: How the world's rich hide their money

Despite what the Prime Minister says, there is a perception that we are at least a mini-tax haven.

The lawyers, tax accountants and trustee companies are doing very nicely out of these offshore trusts and in some cases it must be dirty money that they're shuffling around.

It's time the Government closed the offshore trust business down. It's a terrible look.

Debate on this article is now closed.