{"id":17681,"date":"2012-10-09T09:44:09","date_gmt":"2012-10-09T08:44:09","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=17681"},"modified":"2012-10-09T20:18:27","modified_gmt":"2012-10-09T19:18:27","slug":"why-is-new-zealand-a-tax-haven-the-answer-is-on-the-web","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2012\/10\/09\/why-is-new-zealand-a-tax-haven-the-answer-is-on-the-web\/","title":{"rendered":"How do we know New Zealand is a tax haven? The answer is on the web"},"content":{"rendered":"

New Zealand's Finance\u00a0Minister\u00a0is telling the\u00a0world\u00a0his country is not a tax haven right now. The reason he says, in his own words<\/a>, is that:<\/p>\n

\"The key identifying characteristics of tax havens are secrecy and lack of transparency. Those are simply not factors here in New Zealand. Our legislation for taxing trusts is fully transparent.\"<\/p><\/blockquote>\n

What a load of nonsense. It took me seconds to find a web site selling such trusts, here<\/a>. Now let me be clear: I'm not for a minute saying the firm I'm quoting are doing anything illegal. But note what they say about why NZ is not a tax haven<\/a>:<\/p>\n

While New Zealand is NOT an offshore haven, it is nonetheless recognized among informed practitioners as a first rate jurisdiction for certain financial structures. It provides all the advantages of traditional \"offshore\" financial centres, but is regarded as a true \"onshore\" financial centre which is NOT blacklisted by any jurisdiction or authority in the world. It is not perceived by OECD as a harmful tax jurisdiction, and has no connotations as a tax haven.<\/p><\/blockquote>\n

The nub is simple: it is a tax haven but the semantics have so far not got round to\u00a0recognising\u00a0it as\u00a0such. And how do we know that this firm thinks that its clients are tax motivated?:<\/p>\n

It is not a member of the EU, and is not\u00a0influenced by the EU Savings Tax Directive<\/strong>\u00a0and any future developments (should they be extended to apply to companies or\u00a0trusts).<\/p><\/blockquote>\n

Remember, the sole purpose of the\u00a0European Union Savings Tax Directive is to\u00a0prevent\u00a0tax evasion. It has no other\u00a0purpose\u00a0at all, and yet the fact that the NZ trust is not covered is obviously a key selling feature. I think that's odd. I wouldn't\u00a0advertise\u00a0the fact that a law aimed at tax evaders can't apply to such a trust.<\/p>\n

The law is, however, important to such trusts. It's stated that:<\/p>\n

New Zealand is considered a safe location and offers long term security. It has a well developed infrastructure, including a progressive and robust economy, efficient telephone and internet services and experienced reliable professionals serving global clients with trust and company requirements, who can offer confident legal opinions on tax, trust and company matters.<\/p><\/blockquote>\n

The typical attitude of the law having a duty to\u00a0protect\u00a0private interests which however have no\u00a0obligation\u00a0to the law maker that so\u00a0identifies\u00a0tax haven abuse is inherent in this claim.<\/p>\n

Then note what they say about forming a trust:<\/p>\n

Trust formation\u00a0of a\u00a0 New Zealand Foreign Trust is modeled on the English form of trust. All income sourced offshore is totally tax free, and there are no capital gains, inheritance taxes or forced heirship. Any income earned within New Zealand is subject to domestic tax. The income can either be retained in the trust, or alternatively distributed to named beneficiaries.<\/p><\/blockquote>\n

The claim is typical offshore recklessness: the offshore (note the use of that word) income need not be tax free. It may well be wholly taxable where the settlor or\u00a0beneficiaries\u00a0of this trust are. It's just not taxable in New Zealand. This is the typical tax haven attitude of ignoring what happens \"elsewhere<\/a>\". This claim is not justified and could lead to a false impression on the user's part. What it definitely looks like is a tax haven pitch. As is this:<\/p>\n

In order to benefit from the aforementioned tax exemptions, the Foreign Trust requires:<\/p>\n