The international media often depicts New Zealand as a country of wealthy people, complex financial deals, and exotic lands. However, the country isn’t a tax haven as it has been reported in some quarters. Whereas OECD has a list of countries considered to be tax havens, New Zealand doesn’t feature on the list. There are minimal chances that it will ever feature on it.
Characteristics of Tax Havens
Typically, tax havens impose a marginal income tax or no taxes at all. In such countries, there is little or no tax transparency. There are also laws and other legal proceedings that constrain the exchange of banking information with other countries. Basing on these grounds, New Zealand does not qualify to be regarded as a tax haven. The country does not have a cagey private banking industry. The global standard as far as tax transparency is concerned, is the OECD Model Agreement, which was ratified in 2002. It paves the way for the exchange of tax and private banking information between countries.
New Zealand is among the first countries to observe these standards. It was equally among the first ones to be included on the OECD white list. This way, the country has demonstrated beyond any reasonable doubt that it is a global leader as far as tax transparency is concerned. The country has helped numerous governments to process relevant tax information whenever it has been called upon.
Handling Foreign Trusts
New Zealand has also made a name for itself by the way foreign trusts are handled. It has equally placed stringent requirements on the trustees to ensure that its banking system is as open as possible. In 2006 for instance, new rules were introduced after extensive consultation within and beyond the banking industry.
The new rules stipulate that the resident trustee of any foreign trust must avail a Foreign Trust Disclosure form to the IRD. Also, these individuals must ensure that they keep their tax records in compliance with the nation’s tax regulations. These include particulars of the trust’s liabilities and assets, details of distributions and settlements, and all codes of account. All records must be recorded in English and stored in New Zealand.
About Geoff Cone
Geoff is one of New Zealand’s most prominent legal practitioners. He honed his legal skills at the University of Otago from where he has a law degree. He similarly has a postgraduate diploma in the field of tax and trust law. Mr. Cone has practiced law for more than three decades. He started in Auckland before shifting to Christchurch, then back to Auckland in 1999. He mainly focuses on commercial litigation. He is a partner at Cone Marshall Limited, which was the first law firm in New Zealand to fully focus on tax planning and international tax.