Explaining is losing: “New Zealand is definitely not a tax haven” – Key

John Key has said that the IRD will be looking into all of the 11.5 million documents that were leaked from law firm Mossack Fonseca, dubbed the Panama Papers.

He says it will take the small team assigned the task some time to sift through the documents given the sheer volume, and they will follow any leads they get from the probe.

“There is an expectation that every New Zealander will pay their rightful share of tax,” Mr Key said at a press conference today.

“In the end if there is a New Zealand individual that comes out of the Panama Papers that hasn’t paid their fair share of tax, they can expect a knock on the door from the IRD.”

Mr Key says the answer is not to simply close all foreign trusts in the country, this may cause flow on effects with companies that operate in partnerships for example.

“It would be a dangerous decision to ban a foreign trust overnight.”

The Prime Minister says foreign trusts are not the issue and that some members of Parliament own foreign trusts.

Oooh, now there’s a shot before the bow.  Because Key won’t just be talking about National MPs.

He says instead the focus should be on if the trust is legitimate — the trust must be declared and it must be paying the applicable taxes it owes.

It may not trip the definition of Tax Haven in the sense of the Seychelles, but I think we can all agree that foreign trusts being used by foreigners to place assets in a New Zealand trust so that the trustors and trustees both are not liable for tax payments in New Zealand nor their own countries of residence is clearly a “device” to avoid paying tax.

The fact this “device” is essentially available to anyone from any country and can be implemented against the internationally recognised and fairly standard trust legislation of many countries, including New Zealand doesn’t mean it is in any way illegal.

It can of course be used to contain assets that were obtained illegally, but then so can normal bank accounts.

New Zealand isn’t a tax haven.  But in politics, it’s not the law that counts, it is perception.   Taking a stance on New Zealand not being used to avoid tax is hard to defend.  It is clearly going on.  It is legal, and we’re not the only ones.

Perhaps calling a review, an inquiry and a bipartisan working party would have been better, especially as Labour would then have to be part of the process where they need to explain why they introduced the law in the first place, didn’t change it, didn’t repeal it, and only now have decided that Key is to blame.


– Newshub

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