New reports claimed wealthy Latin Americans are using secretive, tax-free trusts in New Zealand to help channel money around the world.
New Zealand’s Prime Minister John Key said there will now be a review of disclosure rules for foreign trusts but denied his country is a tax haven calling that “utterly incorrect”.
He told reporters: “It’s important to note the existing rules already require foreign trusts to be registered and to keep detailed financial and other records. These can be requested by Inland Revenue and passed onto tax authorities in other countries.”
Key added New Zealand’s Ministry of Justice is moving quickly to tighten anti-money laundering requirements for lawyers, real estates and accountants.
He also attacked journalist Nicky Hager as “a left-wing conspiracy theorist”.
Foreign trusts in New Zealand are not subject to tax and have minimal disclosure requirements which makes them a possible link in international tax avoidance structures.
There are currently nearly 10,700 such trusts in the country, up from fewer than 2,000 a decade ago and a 300 percent increase since 2008.
Mossack Fonseca actively promoted New Zealand as a good place to do business due to its tax-free status, high levels of confidentiality and legal security according to the investigative report.
The company maintains it has always complied with international rules, but this latest report sheds more light on how the world’s rich take advantage of offshore tax regimes.