Revenue Minister Michael Woodhouse has defended New Zealand's tax system following disclosures from the Panama Papers - but disclosure rules on foreign trusts could change.

Mr Woodhouse said calls from Labour to ban foreign trusts altogether were misguided.

"A blanket ban could have unintended consequences and lead to banning other vehicles that operate under the same principle.

"The real issue is around disclosure which is why we have appointed John Shewan to undertake an independent review of disclosure rules covering foreign trusts registered in New Zealand.


"We will wait and see what comes from that review, but the Government is open to changes that Mr Shewan may recommend around disclosure rule of foreign trusts."

New Zealand had complied with every information request from its treaty partners to the standard set by the OECD, and $205 million had been invested since Budget 2012 to beef-up compliance work by Inland Revenue.

Mr Woodhouse's confidence in New Zealand's oversight was not shared by United Future leader Peter Dunne, who was Minister of Revenue from 2005 to 2013.

He said the Panama Papers revelations raised serious questions.

"I am especially concerned at the revelation that the numbers of foreign trusts established in New Zealand has gone up almost four-fold in the last decade.

"That explosion inevitably raises perceptions that New Zealand is being used a tax haven, and that is not good for our international reputation."

Mr Dunne said he could not recall receiving any advice from Inland Revenue in his eight years as Revenue Minister that the foreign trust regime was a problem, or that New Zealand was becoming a tax haven.

"That concerns me too, in the light of current revelations. Was Inland Revenue not aware of what was going on, or did they genuinely perceive the issue to be unimportant?"

Disclosure rules needed to be reviewed urgently, Mr Dunne said.

"Our network of Double Tax Agreements and Tax Information Exchange Agreements has been growing steadily in recent years, but does not include any agreements with South American states, yet, at the same time, the Panama Papers reveal that most of the foreign trusts established here have South American origins."