NZ slated by activist over tax haven problem

`International tax rules ... significantly favour rich countries over poor ones.'

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Tax haven activist Nicholas Shaxson has hit out at New Zealand for opposing a plan to create a UN body to tackle tax haven abuse.

Shaxson, who has become famous following the publication of Treasure Islands: Tax Havens and the Men Who Stole the World, said New Zealand is letting down the developing world.

He has also revealed that New Zealand has a growing reputation as an offshore haven itself. He predicts New Zealand will appear on the Tax Justice Network's Financial Secrecy Index by 2013.

In January, New Zealand's permanent mission to the UN in New York said it did not support the creation of a new intergovernmental body or upgrading existing structures noting the creation would have "resource implications".

"New Zealand is wrong to oppose the upgrading of the UN Tax Committee. Very wrong. It may seem like an arcane detail in global affairs, but it matters," Shaxson said.

There has been massive pressure on tax havens in recent years after information on US and German tax dodgers was leaked to tax authorities exposing just how many are avoiding tax by stashing assets offshore.

That pressure has led havens to sign "tax information" treaties with developed countries allowing tax departments to seek information on citizens using havens, which until recently refused to provide information.

New Zealand has signed 18 such treaties, with four already in force with Guernsey, Jersey, the Isle of Man and Netherlands Antilles. Just last week the IRD made its first information request through these.

"Our expectation is that there will be many more such requests," IRD said.

But while that may work in countries with sophisticated tax departments like New Zealand, it would not end the impoverishment of the developing world, says Shaxson.

"International tax rules, which decide which countries get to tax various forms of income, are set by the OECD, significantly favouring rich countries over poor ones," Shaxson said.

"The OECD, and individual OECD countries, have repeatedly squashed efforts to make a fairer playing field in global economic affairs. New Zealand's support of the OECD position here – which is essentially an effort to keep poorer rivals in their place – is to be condemned."

In a statement, the IRD said New Zealand supports the UN Committee of Experts on International Tax Co-operation. But it added: "Along with a number of countries, has been unconvinced that simply upgrading the committee's official status will be a positive development in terms of advancing the UN's work in the area of international tax co-operation."

- © Fairfax NZ News