Recent media reports have caused an uproar in New Zealand’s legal fraternity. The reports indicated that New Zealand could be a tax malpractice zone, which is contrary to the situation on the ground. Among the people to voice their displeasure at the inaccurate portrayal of the media is Geoffrey Cone, a top notch lawyer and accountant.
Geoffrey Cone points out the characteristics of a possible tax haven. Such countries have a highly secretive banking sector that provides anonymity to tax evaders. They usually have no laws to bolster transparency, creating a loophole which foreign investors can exploit to engage in malpractices.
New Zealand, on the other hand, takes transparency very seriously, especially when it comes to tax matters. The country ascribes to the 2002 OECD Model Agreement on Exchange of Information on Tax Matters. The model helps in the sharing of information between governments so as to enforce local tax laws. Consequently, the nation became the first on OECD white list for its concerted effort in enforcing transparency on tax matters.
Cone further draws attention to the new rules by Michael Cullen in 2006. The rules came about as a result of extensive consultations. They require every local trustee representing foreign trusts to file a Foreign Trust Disclosure form, IR607. The government also needs such persons or institutions to keep and maintain financial records for tax purposes.
Such records include details of settlements and distributions, trust deed, money the trustee receives and spends and the particulars of the trust’s assets and liabilities. If the trust happens to be doing business in the country, the trustee must keep all records of the accounting system, codes of account and any charts.
All foreign investors have to use English as the official language for recording their information. Failure to abide by this regulation would result in severe penalties. The use of English as the official language resonates with the 2011 world enactment of standards that would curb money laundering. Cone further notes that New Zealand has entered many agreements with other countries intending to foster transparency on international tax matters.
Therefore, media reports indicating that the nation is a haven for tax evaders are not only malicious but also false.
Geoffrey Cone is a co-principal at Cone Marshall Ltd., a law firm he helped form in 1999 in Auckland, new Zealand. The company focuses on assisting families from abroad to invest their trusts wisely.