So, is NZ a tax haven?

The left-wing, the opposition and the Media party are all claiming that NZ has become a tax haven as a result of the revelations in the so-called Panama Papers.

So is NZ a tax haven?

Well, the short answer is no.

The slightly longer answer is not even close.

Fortunately the OECD has written a Policy Paper on tax havens, a document the Media party clearly haven’t read, much less understood.

2.1 Definitions of Tax Havens

Given the importance of the issue and the international commitments in this area, it might be expected that identifying tax havens would be straightforward, but this is not the case. There is no agreed definition of what the term “tax haven” actually means. Probably the best known definition of a tax haven is that used by the OECD (1998).

Four key indicators of tax havens are identified:

  1. No or only nominal taxes (and offering, or being perceived as offering, a place for non-residents to escape tax in their country of residence);
  2. Lack of transparency (such as the absence of beneficial ownership information and bank secrecy);
  3. Unwillingness to exchange information with the tax administrations of OECD member countries; and
  4. Absence of a requirement that activity be substantial (transactions may be “booked” in the country with no or little real economic activity).

Let’s look at those individually.

“No or only nominal taxes (and offering, or being perceived as offering, a place for non-residents to escape tax in their country of residence)

We have a comprehensive tax system with double tax treaties with most of the OECD. Trusts are actually taxed at a higher rate than companies so there is no tax advantage to hide income in trusts. Because of the double tax treaties there is also no provision to hide income in trusts for the avoidance of tax in their home country. New Zealand taxes on income earned in New Zealand or by New Zealanders on their world-wide income. So this is a fail for the case of whether or not NZ is a tax haven. Strike one.

Lack of transparency (such as the absence of beneficial ownership information and bank secrecy)

Other than privacy laws, which media just ignore when claiming “public interest” we do not have bank secrecy, and any organisation has look through by authorities. Strike two.

Unwillingness to exchange information with the tax administrations of OECD member countries

New Zealand has double tax treaties with forty countries. Clearly there is a willingness to exchange information with plenty of jurisdictions. We are also currently negotiating Double Tax Agreements with nine other countries (Austria, Belgium, China, India, Luxembourg, Netherlands, Norway, Portugal, United Kingdom). In other words we are extending our willingness to exchange information.

New Zealand also has Tax Information Exchange Agreements (TIEAs) in force with:

And TIEAs that are signed, but not yet in force, with:

And we are currently negotiating TIEAs with:

  • Antigua and Barbuda
  • Aruba
  • Grenada
  • Macao
  • Monaco
  • Montserrat
  • Nauru
  • St Lucia
  • San Marino
  • Seychelles

Clearly and demonstrably we share information with other tax jurisdictions. Strike three.

Absence of a requirement that activity be substantial

Any income earned in New Zealand or by activities by New Zealand individuals and companies taxable on world-wide income. Any income. There is no substantial activity exclusion, Strike four.

Clearly and demonstrably on all four key indicators of whether or not a country is a tax haven as stipulated by the OECD New Zealand fails to meet the threshold. There is not a case that New Zealand is a tax haven, no matter what lying little weasels like Nicky Hager may say about it.

Conveniently Wikipedia also provides a list of countries that ARE defined as tax havens, not that they have bothered to check that. They prefer instead to take dictation from Nicky Hager.

Further the OECD has prepared a blacklist of countries that they classify as a tax haven. In their document they clearly lable New Zealand as NOT a tax haven, with us meeting and implementing the internationally agreed tax standard.

 

The BBC reported on this list in 2009:

The Organisation for Economic Cooperation and Development (OECD) has published its blacklist of non-cooperative tax havens.

Costa Rica, Malaysia, and the Philippines are the countries listed as not having agreed to tax standards.

Uruguay had originally been listed too, but later protested that it had been wrongly included.

After listening to its arguments the OECD said it was happy the country had agreed to its tax transparency rules.

The list is part of efforts agreed at the G20 summit to clamp down on havens.

There is also a list of 38 places that have agreed to improve standards but not yet done so, such as Gibraltar, Liechtenstein, Andorra and San Marino.

On Thursday, G20 leaders agreed to take sanctions against tax havens using the OECD list as its basis.

In their communique, they agreed, “to take action against non-cooperative jurisdictions, including tax havens”.

“We stand ready to deploy sanctions to protect our public finances and financial systems. The era of banking secrecy is over.”

We complied with the OECD requirements in 2009, and the Media party has made much of the fact that National didn’t implement changes in 2010, therefore we still comply with the OECD requirements.

Any claim that New Zealand is a tax haven is simply a construction from the political left to suit their own political beliefs and their hit job against the government. Unfortunately the supposed “investigative” journalists all working on this haven’t even bothered to understand what is actually a tax haven and what is not.

The claims simply do not stack up. New Zealand is not a tax haven by any legal or jurisdictional definition, It is only a tax haven in the political bumper sticker slogans of idiot journalists and left-wing politicians playing their own version of dirty politics and dirty media.

 

-BBC, OECD, Wikipedia


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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story.  And when he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet.   Cam Slater doesn’t do quiet, and as a result he is a polarising, controversial but highly effective journalist that takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him.  But you can’t ignore him.

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