According to a recent coverage in the media, New Zealand was presented as a tax haven. The coverage depicted that foreign trusts in the country are enjoying the exciting business environment where tax obligation is minimal. This word sounds too appealing to be true. As a matter of fact, the complex financial deals of the high-net-worth individuals can get attracted. For your information, New Zealand is not a tax haven. In the future, we do not expect the country to become a tax haven neither. This is the truth.
For this reason, let us first deal with the significant issues at hand. New Zealand, like many other countries, is not a tax haven. Moreover, it is unlikely to become one in the future. Let it be clear that tax havens impose minimal or no tax to corporations and individuals in the region. Another factor concerning tax havens is that they lack a model of transparency. They have procedures and laws that inhibit information exchange with other state agencies and governments. With this information, New Zealand apparently does not qualify to become a tax haven. Nor do the country inhabit a highly-secretive banking system.
The transparency gold standard in the OECD agreement model on Tax Matters and Information Interchange, which supports the multi-national exchange of information between governments to foster and administer domestic tax laws, does not recognize New Zealand as a tax haven. One of the first countries to have their names registered by OECD’s white list for implementing the new tax regulations as agreed on the international taxation standard is New Zealand.
The main reason why New Zealand is considered a tax nation is the way in which they handle their foreign trusts and the trustee requirements. For this reason, the proceeds go towards assisting states to request the relevant information.
The country has operated under new rules introduced by the former president. In 2006, Michael Cullen had an extensive consultation with OECD before developing the regulations. Under his regime, the country’s foreign trust resident trustee is required to submit a Foreign Disclosure Trust Form as required by the IRD.
The tax forms include distribution and settlement details for member parties, trust deeds, trust’s liabilities and assets details, and all the funds gained and spent by the trustee annually.