Panama Papers: New Zealand revealed as a tax haven
New Zealand - the collection of sparsely-populated islands in the South Pacific, better known for its sheep and excessively-traded currency than for being a tax haven - was implicated at the heart of the Panama Papers on Monday.
An investigation by state media TVNZ and RNZ and independent journalist Nicky Hager, revealed more than 61,000 references to New Zealand entities in the leaked documents from Panamanian law firm Mossack Fonseca.
Mossack Fonseca first set up its local branch in the country’s largest city, Auckland, in December 2013, before promoting the archipelago as its latest tax destination and selling it to clients from Latin American countries - primarily Mexico, Uruguay, Chile, Brazil and Ecuador.
The firm pushed the tax-free status of foreign trusts, high confidentiality, legal security, and the lack of structure or need to report too much to the authorities as reasons to use New Zealand.
Its business was always conducted through Roger Thompson - initially as part of the firm Staples Rodway, before Thompson set up his own firm called Bentleys Chartered Accountants, registered in an Auckland office tower at the same address as Mossack Fonseca New Zealand.
Look-through companies, trusts and limited partnerships were favoured options for clients, with Thompson joining two Panamanian directors on the boards of these entities.
Character checks involved a simple passport copy and a utility bill to confirm address details - though these did not form part of public documents.
New Zealand’s relatively simple tax code allowed for Bentleys to submit a one-page Foreign Trust Disclosure to the Inland Revenue Department once per year, declaring that no tax needed to be paid under foreign trust law.
The number of foreign trusts in New Zealand more than tripled after law changes in 2008 and 2011 made tax-free trusts much easier to establish.
But the country’s government remained adamant there was no problem after the reports on Monday.
At his post-Cabinet press conference, Prime Minister John Key - of the governing, right-leaning National party - spoke to the issue without being prompted.
“It’s my clear expectation that all New Zealanders pay their lawful tax,” he said.
“As a result of the Panama Papers, the Inland Revenue Department has set up a small group to review the papers to ensure New Zealanders are meeting their tax obligations, and to support other countries if requests are made for further information.”
He admitted it was possible foreign trusts were being abused in New Zealand, but said he considers the tax regime generally robust.
“We don't like [tax avoidance] and we want to close it down. That's why we're working with the OECD on the base of minimisation, but the problem we've got is we can't do that in isolation,” he told the assembled media.
“We can't just magically say 'New Zealand can stop it'. We need all these other countries to work with us.”
Winston Peters - leader of the minor New Zealand First party, which sits on the cross-benches - was quick to respond to the Prime Minister, calling for a Commission of Inquiry.
“He's like a boy who's had a widdle behind the couch and he's denying it to mum but saying, look but if I had, I'll mop it up,” Peters said on RNZ National radio.
He said there was no doubt New Zealand was a tax haven, with firms such as Mossack Fonseca advertising the fact.