While responding to a feature on foreign trusts, Geoffrey Cone was very categorical, stating that New Zealand is not a tax haven. Contrary to how the media depict the country, the truth is New Zealand is very transparent on tax related issues and is very unlikely to join the league of tax havens.
Some of the main characteristics of tax havens include the lack of transparency, failure to impose nominal taxes, as well as laws and procedures that prevent the exchange of information between different nations. New Zealand on the other hand neither has a highly secretive private banking sector nor does it have any of the above characteristics.
New Zealand not only implemented the internationally agreed tax standards but was also among the very first countries to be placed on the OECD’s white list. The 2002 OECD Model Agreement regarding the exchange of Information on tax related issues is the gold standard for transparency.
New Zealand’s ways of handling foreign trusts, as well as the conditions placed on trustees have demonstrated the country’s leadership in tax transparency.
Michael Cullen held extensive consultations, and in 2006 he introduced new rules. Part of these new rules requires a New Zealand resident trustee of a foreign trust to submit a Foreign Trust Disclosure form. They are also advised to keep financial records among other documentation for tax purposes. All records and documents should be kept in New Zealand and must be recorded in English. Failure to do so attracts heavy penalties. The world standard money laundering legislation enactment in 2011 enhanced these rules.
New Zealand has tax information exchange agreements with over 20 other countries. These agreements are instrumental in preventing tax avoidance and evasion. Additionally, the country has signed a multilateral Convention scheduled for Mutual Administrative Assistance in Tax Matters. These among other actions do not depict a tax haven.
All in all, New Zealand has a high number of foreign trusts, and the number keeps growing. This growth is attributed to the regulatory environment that has been created over time by successive regimes. The country boasts of a well-regarded judiciary with substantial legal and professional infrastructure, adding to its popularity as a safe haven.
Geoffrey Cone graduated with LLB honors from the University of Otago, New Zealand. He also holds a post-graduate diploma in tax and trust law. He has been practicing since 1980 and has appeared in the courts at all levels. Geoffrey established his firm Cone Marshall Limited in 1999, and it is the only law firm in New Zealand that has specialized exclusively in international trust and tax planning.
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