United Future leader Peter Dunne says the latest Panama Papers revelations raise 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.
“These revelations challenge the identity of New Zealand – we do not want to be seen as a country that enables tax evasion.
“We know how we regard other countries traditionally labelled tax havens – it is more than a little galling to think New Zealand might now be regarded in that light,” he says.
Mr Dunne, who was Minister of Revenue from 2005 to 2013 says he cannot recall receiving any advice from Inland Revenue in that time 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?” he asks.
Mr Dunne says New Zealand needs to continue to work with international partners to develop robust and transparent rules for the operation of foreign trusts internationally, to ensure they are not vehicles for illegal or criminal tax evasion and money-laundering.
He also says that, at the same time, there is a clear need for New Zealand to review its own disclosure rules to identify who the trusts comprise and where they should properly be taxed, and to broaden its network of Tax Information Exchange Agreements in particular.
“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,” he says.
Mr Dunne says New Zealand needs to do all it can to avoid the label of tax haven from sticking.
“The bottom line is that being labelled a tax haven has in transparency and reputation terms, the same impact that an outbreak of foot and mouth disease would have on our reputation as viable primary producer,” he says.