Even though recent media coverage has painted New Zealand as a place full of wealthy people making complex financial deals and living an ultra-plush life, the truth is much more boring. The truth is that, contrary to popular belief, New Zealand is not a tax haven.
As lawyer Geoffrey Cone points out, the OECD (Organization for Economic Co-operation and Development) maintains a list of worldwide tax havens. New Zealand is not one of them and will likely never be. A tax haven is characterized by the lack of imposition of taxes or the imposition of only nominal taxes. There is also a lack of transparency and there are typically laws in place that inhibit any exchange of information with other national governments.
Under those characteristics, New Zealand does not qualify as a tax haven. Nor do they have a secretive private banking industry. The country was one of the first countries to be placed on the OECD’s white list for having significantly implementing the agreed tax standard.
New Zealand has shown leadership in tax transparency in the way it handles foreign trusts and requirements needed by trustees. All of these factors work towards the assistance in helping other governments requesting information.
After serious consultation, new rules were implemented in 2006. Because of these new rules, a resident trustee of a foreign trust must submit a Foreign Trust Disclosure form to the IRD and to also keep records for New Zealand tax purposes. These records include the trust deed, details of assets and liabilities, settlements and distributions and money the trustee receives or spends. If the trust is carried on a business, that trustee must keep additional information, including records regarding accounting and charts of the account.
All of the records are kept in New Zealand, recorded in English, and anyone failing to follow these rules is subject to penalties. These rules and power were enhanced even more in 2011 with the passing of world standard money laundering legislation.
New Zealand also has 39 double tax agreements to reduce tax obstructions, over 20 tax information exchange agreements and has also now signed up to a multilateral Convention on Mutual Administrative Assistance in Tax Matters. New Zealand is furthest from being of a tax haven.
This enlightening information was provided by Geoffrey Cone, a New Zealand lawyer. He graduated from the University of Otago, New Zealand, with a post graduate degree in tax and trust law. He began practicing law in 1980 and eventually found himself a partner and the Chairman of Partners in a leading law firm. At that practice he specialized in commercial litigation, as well as tax and trust advisory work.
After being a litigator in the British West Indies for two years, he returned to New Zealand in 1997. In 1999, he created his own practice, called Cone Marshall Limited. His practice is the only one in New Zealand that specializes exclusively in international trust and tax planning. It also provides trust management services through its associated companies.