Panama Papers: NZ tax system review 'highly likely' video

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What's the New Zealand link to the Panama Papers?

Prime Minister John Key says he has no tax secrets to hide, but has been called "far too cagey" by Labour for not disclosing the details.

The Government has shifted its position on foreign trusts in the wake of criticism of its handling of the fall-out from the Mossack Fonseca "Panama Papers" document leak.

Key said the Cabinet would consider appointing an international, "independent" expert to look at New Zealand's laws.

Since the Panama Papers scandal erupted, pointing to NZ's role as an international tax haven, Prime Minister John Key ...
DAVID UNWIN/FAIRFAX NZ

Since the Panama Papers scandal erupted, pointing to NZ's role as an international tax haven, Prime Minister John Key has continued to defend the country's tax system.

Asked whether he had used an offshore tax account for investments, Key said he had lived overseas so had had a superannuation fund in Singapore, where he lived at the time, but had never used tax shelter companies.

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He had no intention of releasing his tax records and said he had never used sheltering vehicles.

"I'm quite comfortable and very confident of my tax record," he told Radio NZ.

Opposition Leader Andrew Little said the Prime Minister was "far too cagey" when asked if he had used a tax haven for his finances.

"New Zealand's reputation is being sullied around the world," he said, referring to criticism of New Zealand's laws surrounding foreign trusts.

"One tax expert isn't going to solve this, especially one appointed by a Prime Minister who doesn't think hiding their finances behind tax free funds is morally wrong."

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Key told Radio NZ that it was "highly likely" that the Government would ask an expert to undertake a review of New Zealand's foreign trust laws.

Revenue Minister Michael Woodhouse had previously indicated the Government would wait until the Organisation for Economic Cooperation and Development (OECD) completed a scheduled review of New Zealand's tax laws before considering any changes.

That OECD review is due to take place during the first half of next year.

"We wouldn't rule out making any changes, but New Zealand is already contributing to the OECD's review and we need to wait and see what the outcome of that is before we leap to any conclusions," Woodhouse had said on Tuesday before Keys' comments on the new "independent" review.

No details have been announced on how or by whom the "international expert" would be appointed. "You'll have to wait until later in the day for this," Woodhouse said.

The OECD has also accelerated its efforts to examine the implications of the Panama Papers revelations.

Government officials from around the world had called on it to convene a special meeting on Wednesday to "explore possibilities of co-operation and information-sharing, identify tax compliance risks and agree collaborative action", the OECD said in a statement.

Key said the advice the Government had was that New Zealand was not a tax haven and was compliant with OECD rules. "In fact I think we're ranked in the top 20 of disclosure and good practice."

Labour still called for an inquiry, to ensure New Zealand was not part of "an international tax evasion racket".

He told the Paul Henry Show earlier that he did not support a commission of inquiry, as suggested by New Zealand First leader Winston Peters.

Labour still called for an inquiry, to ensure New Zealand was not part of "an international tax evasion racket".

Green Party co-leader James Shaw said the Prime Minister was moving very quickly to "limit the damage" to the Government's reputation.He said Key denied last week the fact New Zealand was regarded as a tax haven internationally."Given the Government's reluctance to admit that there's even a problem, I would say that this is a start," he said.

"We would have preferred a proper inquiry in which people could make submissions, and you could have a range of experts."

NZ First leader Winston Peters said the approach was a "partial backdown" by the Prime Minister.

There needed to be support behind the tax expert's review by agencies such as Transparency International or the UK justice group working on the matter, he said."Trying to damage control this is not in our national interest," he said.

"Our national interest is cleaning up our act."

"These sorts of things are not going to go away, they're only going to get worse."

What is the problem with foreign trusts?

There are 11,645 foreign trusts in New Zealand. There are concerns many are being used by foreigners to avoid tax overseas and for money laundering.

Why are they in the spotlight now?

The leaked so-called "Panama Papers" show Malta government officials set up a trust in NZ as part of a complex global chain of companies. Unaoil, a Monico company being investigated for bribery in the oil industry, also appears to have used an NZ trust to mask its activities.

Are NZ's rules governing foreign trusts weak?

Yes. Foreigners can set up untaxed trusts here without disclosing their own identity or submitting details of what the trusts are used for.  Auckland University law professor Michael Littlewood says that makes NZ's rules surrounding foreign trusts the loosest in the OECD.

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