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Deborah Russell: What’s going on with foreign trusts?

Written By: - Date published: 8:00 am, April 5th, 2016 - 66 comments
Categories: Abuse of power, International, john key, national, national/act government, Politics, same old national, slippery, tax - Tags: , ,

Henry Viii trust breaker

Trusts are weird beasts. They seem to have originated during the crusades: a death-and-mayhem-seeking-pilgrim would head off to the Holy Land, but in order to protect himself and his wife and his children and his property, he would hand over the “use” of his property to a reliable friend or neighbour. That friend would hold the property, in effect own it, for the benefit of the wife and children and so on. These “uses” turned out to be very effective vehicles for all sorts of chicanery, so eventually, Henry VIII tried to ban them. But they crept back, as trusts.

The basic idea of a trust is that someone who owns property hands that property over to another person, who holds it for the benefit of a third person. The person who gives the property is the settlor, the person who holds the property is the trustee, and the person who gets the benefit of the property is the beneficiary.

From the New Zealand government’s point of view, it doesn’t want New Zealand residents squirrelling property away into overseas trusts where the government can’t tax it. To prevent this, the New Zealand government bases taxation of trusts on where the settlor (the person who gives property to the trust) lives. If you are living in New Zealand (technically, if you are a New Zealand tax resident) and you give property to a trust, then the government here will tax that trust.

So what’s the beef with foreign trusts?

New Zealand tax law allows a foreign person who is not living in New Zealand to settle property on a trust, for the benefit of foreign persons who are not living in New Zealand at all, and at the same time, have a trustee here in New Zealand. But the settlor is overseas, and the beneficiaries are overseas, so the trust doesn’t get taxed here, at all.

That all seems fairly innocuous, provided that the trust gets taxed somewhere. But other countries don’t have the same rules as us. Many other countries tax trusts on the basis of where the trustee lives. If the trustee lives in your country, then you tax the trust, but if the trustee lives overseas, then they don’t tax it.

This means there is a mismatch between New Zealand’s rules for taxing trusts, and other countries’ rules for taxing trusts, and that mismatch creates a loophole that can be exploited. There’s quite a lucrative industry here in New Zealand, providing trustee services to foreign trusts, that was estimated in 2009 to earn about $20million in fees every year.

Overseas tax regimes can get at the property held by the New Zealand trustee, but only if they actually know about it. It’s very hard to tax something that you don’t actually know exists.

Unfortunately, the New Zealand tax administration doesn’t collect much information about foreign trusts with New Zealand resident trustees. If you look at the IRD’s Foreign Trust Disclosure Form, you will see that all a trustee has to disclose is the name of the trust, the name of the trustee, and whether or not the settlor (the person who gives property to the trust) is resident in Australia.

This all makes it very easy indeed for foreigners to channel money through trusts with a New Zealand trustee. It pushes us dangerously close to being a tax haven, and in fact, there are plenty of tax consultants and trustee firms advertising their services to enable people to take advantage of the laws. This very much suggests that we are in fact, operating as a tax haven.

The solution is quite straightforward. Up the disclosure requirements. Trustees should have to disclose the name of the trust, the names of the settlors, the value of the property held on trust, a description of the property held on trust, and the names of the beneficiaries. And this information should be made available to other tax regimes. If the authorities in the United Kingdom want to know which of their tax residents are settlors or beneficiaries of New Zealand foreign trusts, then our Inland Revenue Department should be enabled to pass on the information.

There’s just one slight caveat. There can be good reason for some people to want to hold money in a trust where it can’t be found. Perhaps people fighting for democracy in an oppressive regime might want to take steps to protect their property, so that if all else fails, they can flee. But surely we can design some measures to provide for this contingency. And in the meantime, we should be committed to letting some sunlight in.

Of course, the people setting up and selling foreign trustee services will miss out on their fees, and perhaps they will be lobbying hard to keep this handy loophole. But I’m not feeling all that sympathetic. They’re exploiting the loophole just as much as the foreign settlors and beneficiaries are, and they’re dragging down New Zealand’s good reputation in international tax.

Further reading:
Terry Baucher on “The curious world of foreign tax trusts…
Richard Murphy on how we can tell that NZ is a tax haven

Reprinted with permission from deborahfrussell.net.

66 comments on “Deborah Russell: What’s going on with foreign trusts? ”

  1. Aspasia 1

    “Uses” did not develop for all sorts of chicanery but to protect land from the king. It was not possible to leave land to whoever the testator chose…it had to go to the heir (just as the English crown nowadays must still go to the heir). If the heir was underage, the king got to administer the estate until the heir came of age…that’s time for a huge amount of asset stripping(fell forests, take all the building stone, exhaust grazing, kill all the game etc). It was possible to transfer land ownership before death so the “trusted friend” got to be the legal owner of estate before the landowner went off to fight in the war (not necessarily on Crusade, often the king’s wars in France or Scotland). The law of trusts developed to safeguard the heir when the “trusted friend” turned out not to be so trustworthy when landowner was no longer around. king Henry VIII was not after reforming abuse but was blocking up loophole depleting his revenue stream. The right to administer a minor’s estates and to marry him/her off was a valuable asset and was often on-sold by the Crown to the highest bidder. The Court of Wards developed as a major government department to run this on-selling process.

    • ianmac 1.1

      Interesting detail Aspasia.
      But currently the problem and solution outlined by Deborah is of great interest as it confounds the position Key has taken. His usual everything is OK, Nothing to see, and trust him sounds a bit hollow. Wonder where his trusts are? In NZ or in Malta or Panama?

  2. nadis 2

    Focussing on potential tax implications of this issue is actually falling for a very significant misdirection. Yes, the obvious implication of the offshore trust industry is to enabel people to avoid paying tax. But pretty much every comment in NZ in the last few days is missing the major point:

    This is actually about money laundering. Hiding the origins of funds and creating an entry point for those funds to enter legitimate financial networks.

    NZ has become part of the global anti-money laundering and countering the financing of terrorism regime which is driven by the US. All very sensible except that NZ has one ridiculous carve out. Lawyers and accountants are NOT subject to the AML rules in the same way banks, fund managers, money changers etc are. There is no legal requirement under the AML legislation for a law firm to check the identity of and understand the source of funds when a new client walks in the door. I can assure you that the large CBD law firms have facilitated way more non-resident trust business (by value) than what you are reading about in the Mossack Fonseca data. Believe me, there are literally billions of dollars of dirty Russian and dirty Chinese money laundered though NZ with the full assistance of a bunch of large firm NZ lawyers.

    The tax angle is secondary. The NZ law is simple – non residents with income sourced from outside NZ do not pay tax in NZ. That’s not controversial, in fact most british law based countries have the same approach. The next question is should NZ be collecting taxes on behalf of foreign tax jurisdictions – my opinion is no, that would be an incredibly difficult mission to embark on.

    But there is no doubt we should be doing a lot more of what Deborah is discussing.
    1. Legally identify the source of funds
    2. Legally identify the settlers, trustees and beneficiaries of any NZ domiciled trust
    3. Make this information available to foreign tax authorities that we have a tax treat with
    4. Make this information available to appropriate law enforcement authorities in NZ

    Bringing lawyers and accountants under the existing AML laws would immediately resolve almost of the issues.

    Where the tax minimisation does intersect more fully with the trust business is in the financial sector. I was periphally involved with many transactions both through NZ and other jurisdictions where trusts were used to change the ownership and nature if funds. None of this illegal, but essentially taking funds sourced in (say) Europe as equity, converting it into NZ owned debt and investing it in the US blah blah blah. Net result a guaranteed return that was essentially arbitraging different tax treatments of debt and equity in different jurisdictions. For quite a few years NZ was ground central for that business, but IRD closed it down by changing te technical rules around thinly capitalised NZ entities. IRD doesnt care about the current offshore trust business because there are no tax implications for NZ.

    Anyway, this offshore trust industry needs tidying up, but it is wrong to focus primarily on the tax implications. It is actually about money laundering which is why NZ is so popular – once funds enter the global system from NZ they look pure. Bring lawyers into the AML regime, gather all trust data as if it was a trust with NZ taxpayers and this would be cleaned up in no time.

    • ianmac 2.1

      Great stuff nadis. Thanks.
      An avenue for money laundering and some taxing. I get it.
      Winston/Winebox will be sure to comment on similar lines.

      • nadia 2.1.1

        I’d add that a lot of “entities” that use the foreign trust route (rort?) are quite happy to pay tax – especially to authorities in places like the EU, UK and the US as this further legitimises the money.

        Let’s say you have just stolen $100mm (after bribes and other costs) in a Russian crony deal, and you get that money into the white financial system. You’re now earning interest at say 4% on your investments (interest, dividends etc) – why wouldn’t you be happy pay 30% of 4% of 100mm (that’s a tax bill of 1.2 million). You are now an official part of the globally regulated financial system. Call the 1.2 million a fee for legitimising your 100mm – a no brainer.

        • greywarshark 2.1.1.1

          Come to NZ with your legitimised money, now whitened, and we will make it
          100% Pure. We have our ways, like Filipino surgeons, at achieving miracle transformations and even transmogrifications. And we need some figures on the credit side to balance the debits, so we can continue to borrow and be assessed with a high rating to keep our interest payments lowish. We are very flexible here, we’ll bend over backwards even, so give us a call.

    • Anton Angelo 2.2

      “Clean NZ Green”.

    • Draco T Bastard 2.3

      +1

      Good info.

    • Incognito 2.4

      Bingo! [no pun]

      In September last year Hamish Fletcher wrote a very nice piece in the NZ Herald Dirty cash: The fight against money laundering – should NZ do more?.

      In this piece he listed Four ways to cleanse your filthy lucre and John Key & National clearly tick three of those (and no, it does not include cycleways): casino, real estate, and overseas shell company.

      From http://www.dia.govt.nz/Services-Anti-Money-Laundering-Index:

      Money laundering is how criminals disguise the illegal origins of their money. Financers of terrorism use similar techniques to money launderers to avoid detection by authorities and to protect the identity of those providing and receiving the funds.

      The Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (AML/CFT Act) places obligations on New Zealand’s financial institutions and casinos to detect and deter money laundering and terrorism financing.

      The Act will ensure that businesses take appropriate measures to guard against money laundering and terrorism financing. This enhances the reputation of individual businesses, and of New Zealand as a safe place in which to do business.

      The Act came into full force on 30 June 2013.

      I think this clearly puts the responsibility for this at the feet of John Key & National, in case there was any doubt about it.

      • nadis 2.4.1

        The fact the act came into law in 2013. Prior to that there were almost no controls on “know your client” and other mechanisms to try and identify money laundering.

        Much as you would like a narrative that “National did this” you cant. Foreign sourced income to non-NZ tax residents has always been exempt from NZ tax (duh!). Not sure when trust laws were last looked at but I think 2006.

        For both parties, this is more about unintended consequences rather than intent to facilitate money laundering.

        In my opinion, a real flaw in our system is allowing lawyers to regulate themselves. The thinking is that the responsibilities of lawyers under the various legal acts would mean they would have a superior approach to knowing their clients and sources of income than other mortals. Sadly this has shown itself to be untrue on a regular basis. In my experience legal advice at the corporate level is purely about what meets then minimum legal standard rather than what is morally right. But I spose that is a lawyers job.

        Here for instance is where the ethics line can be found (or not found):

        http://www.nytimes.com/2016/02/01/us/report-describes-lawyers-advice-on-moving-suspect-funds-into-us.html?_r=0

        • Incognito 2.4.1.1

          To say “National did this” sounds so infantile and lacks the necessary nuance but I admit that my statement about responsibility was ambiguous.

          The Act obviously dealt with some aspects of ML, more with a national focus, but left many issues out. The reasons for this may have been technical (too hard), political, or some other; I honestly don’t know. But the Act is also a convenient excuse that can be used as a smokescreen to deflect attention away from some of the issues that were not dealt with. So, this is rather a “National did not do this” if you like; what was omitted from the Act.

          The Act came into full force under National since they are now in Government it is their responsibility to take action as and when required.

          Hamish Fletcher connected the dots and on each of those National cannot escape responsibility, for initiating, stimulating, propagating, obfuscating or all of these. Take your pick.

          Meeting the minimum (legal) standard has been normalised by National; it happens almost everywhere and all the time. Some call it “satisficing” and others “pragmatism”. In any case, Key promised to hold a candle for higher (highest?) standards but he breaks this promise on a frighteningly regular basis; it has become a pattern.

    • AmaKiwi 2.5

      “This is actually about money laundering.”

      Political corruption is the real danger.

      Campaign contributions totaling $10 or $20 million dollars are easy to collect from billionaires if you promise to keep letting them clean their dirty money.

      He who pays the piper calls the tunes.

  3. Draco T Bastard 3

    The solution is quite straightforward. Up the disclosure requirements. Trustees should have to disclose the name of the trust, the names of the settlors, the value of the property held on trust, a description of the property held on trust, and the names of the beneficiaries.

    That’s not the solution. The solution is to ban foreign trusts.

    This is a similar solution to the housing crisis and our increasing foreign indebtedness which is to ban offshore ownership.

    Sure, it’s going to decrease the number of customers that NZ firms have but then trying to export services isn’t a viable option anyway. Same as being export dependent on farm produce isn’t a viable position.

    The nations receiving those services will close the loopholes that are presently making them viable (My preferred option is to say that any dealings with a tax haven automatically returns all owned assets to the state) and they can produce their own lawyers.

    • nadia 3.1

      The reaction to ban anything you don’t like is childish. There are legitimate reasons why these exist and serve a purpose.

      Instead of using the word “ban” so freely, cut and paste this language instead:

      “control and tax”

      Then trusts with legitimate purpose can still use NZ, but the the ratbags are driven away.

      • nadis 3.1.1

        hmm – just noticed i mis-spelled my handle. Fingers need to go on a diet.

      • Draco T Bastard 3.1.2

        There are legitimate reasons why these exist and serve a purpose.

        I can’t think of any that wouldn’t be better served by being in their own country. In fact, the only reason I can think of for having an offshore trust is to avoid the dues of your own country.

        • nadis 3.1.2.1

          Not all countries are countries that have sensible rule of law.

          What if your own country is Singapore and you are an opposition MP getting sued to bankruptcy by a compliant judiciary?

          Or you are a human rights organisation that wants to hide donor identity?

          Or you have a failed banking system back home?

          Or in your own country there is no rule of law and the govt can expropriate assets corruptly.

          Or you want to preserve assets for your children and not your 11th wife?

          There are lots of valid reasons that arent immoral. What’s broken is the secrecy. Solve that and there isn’t anything like the same problem.

          Lets say there 12,000 trusts on the register. Collect the info as previously discussed, make them subject to normal AML requirements, require annual accounts to be filed, charge a fee of $10,000 per annum. Problem solved.

          • One Anonymous Bloke 3.1.2.1.1

            If you are any of these things you would be ill-advised to set up a trust in New Zealand because the National Party will find a way to sell your information to dictators and extradite you to death.

            • nadis 3.1.2.1.1.1

              Such as?

              • One Anonymous Bloke

                Would you trust this Prime Minister not to profit from a trade in such information? What about the evidence that KDC’s residency visa was a form of entrapment?

                • Nadis

                  Thats not the same thing as suggesting it happened.

                  And no i dont beloeve dot coms residency was entrapment. Entrapment implies that the residency caused his legal troubles. From memory dot com chose NZ – in gacr hr threatened to go to canada or austria if nz didnt approve his residency. Either of those countries would be gar easier for the usa to exteqdite him from than nz. Austealia for instance qould habe gad dot com in a derention centre rather than a waterfront apartment.

                  And residency is irrelevant to extradition.

                  I think occams razor suggests a string of unnrelated decisions and general cockups rather than a sophisticated conspiracy.

                  • One Anonymous Bloke

                    It was more a general comment on the ethics and character of the hollow men than a specific allegation.

          • Draco T Bastard 3.1.2.1.2

            KDC is an interesting case in point. If any of those nations found out that any of the situations existed and we had a trust that was fully open then the country would just do what the US did – and we’d comply.

            To get what you say is needed would actually require the secrecy. Making them disclose all that information would mean that the people trying to hide from vindictive governments would be outed.

            Then there’s the question: How many are used for those legitimate purposes?
            Because I’m reasonably certain that it would be less than 1% and that the rest are used for illegitimate purposes.

            Thing is, I don’t see any legitimate reason for trusts any more. We actually do have the rule of law (even though National tends to break the laws so that they don’t work any more) so the reason of protecting assets from the state no longer exists and people shouldn’t be able to protect their assets from the risks that they take.

            No, the only reason for trusts today is as a tax dodge.

          • Puddleglum 3.1.2.1.3

            Hi nadis,

            Presumably, then, you also agree with Deborah Russell’s ‘slight caveat’ given your examples?

            Making the names of settlors and beneficiaries available to such governments may endanger them.

            And thanks for the interesting commentary. Much appreciated.

        • AmaKiwi 3.1.2.2

          “The only reason I can think of for having an offshore trust is to avoid the dues of your own country.”

          My grandparents were trapped when the Nazis overran their country. Overnight their homeland went from democracy to dictatorship. They were able to flee because they had an overseas trust. Without that money they would have been killed.

          This is even more true today. If we can guarantee everyone in the world peace, stability, and democracy, there is no need for financial boltholes. But we can’t.

          • nadis 3.1.2.2.1

            These discussions and examples are exactly why this whole area of law is so fraught with difficulty. Setting up a well intentioned law usually allows ratbags to exploit it for nefarious means. There are good reasons for anonymous trusts, but those reasons are exactly why criminals like them.

            I suspect Mr Mossack will be spending some serious time at Club Fed. He would appear to have perjured himself quite severely in the US:

            The firm’s Panama-based co-founder, Jürgen Mossack, testified under oath that “MF Nevada and Mossack Fonseca do not have a parent-subsidiary relationship nor does Mossack Fonseca control the internal affairs or daily operations of MF Nevada’s business.”

            Emails show a conspiracy to delete data and remove files from the US.

            Panama has an extradition treaty with the US.

            https://panamapapers.icij.org/20160403-mossack-fonseca-offshore-secrets.html

          • Draco T Bastard 3.1.2.2.2

            Very lucky for them.

            Why’d they set it up in the first place? Because I doubt if it was to flee the country after the Nazi’s invaded.

  4. adam 4

    These mutations are just the the parasite evolving, but it is still sucking the life blood out of our society and the world.

    Is this the epoch when people finally wake up to the reality that capitalism is that parasite?

    It can not help itself, it will eat us all, unless we stop it.

    • Draco T Bastard 4.1

      Is this the epoch when people finally wake up to the reality that capitalism is that parasite?

      The only way we can ensure that that happens is to keep telling people the truth about how capitalism truly operates and how it’s inherently corrupt.

    • aerobubble 4.2

      Rubbish. Parasites exist, communism gets them too, worse even.

      The question i think the revelation poses is quite simple, do rich people want to be outed as associating with drug barons, dictators and tax dodging football stars.
      This story is a shot across the bows, anyone idiotic enough to believe wealth means you have a right to avoid progressive taxation.

      Pay your tax or else your next. Trusts are in the limelight, you like them, so if u wish to continue to, to protect wealth, dont be abusing also to avoid tax. duh.

      Thatcherism was not the reason for the last thirty years of avantageous growth, cheap oil would have engorged whomever was in power, and moderate liberal govts would have used tax revenues to build freer markets, and left the world more prosperous. Now the era of stupid rich myth is ending. Thatcher was a creep, neo lib a over simplied distraction to create a over supply of financial services.

      • adam 4.2.1

        OH look seagulls.

        Can you dribble any more areobubble. Wait, how about we get you Mccarthy’s hand book?

        Any artist you want to crucify whilst you are at it?

        “One must not criticise capitalism, as it’s wonderful and look all the lovely things you have, yes that was capitalism, so you daft commie, shut up”

        Is that what you were thinking areobubble? or was it more John Wayne in form – “Shot that God Dam Commie B*&^%$d”?

        I can’t even work out what else you are saying. Any chance of a clarification, after your first remarks.

        Just a wee heads up — if you going to say “duh”, It would be useful to have a comprehensible sentence preceding it. Rather than, well, I just don’t know what you were trying to say.

        • aerobubble 4.2.1.1

          Humans are parasites on the planet, capitalism is just natural behaviour for our spies. No, superbeing, you, can undo this, so disappear up your ad homi arse.

  5. Colonial Viper 6

    Taxes are only for salary and waged working saps, and for small Kiwi businesses who are just trying to make it month to month.

    They’re not for financial capitalists nor the power elite 0.01%.

  6. shorts 7

    thank you for explaining this Deborah in a manner I can understand – cheers to the standard for the post

    Time to Eat the Rich isn’t it?

    • Murray Simmonds 7.1

      Yes, thank you Deborah for a wonderfully clear exposition on what trusts are/should be for. The history is interesting too. And thanks also to Aspasia for expanding on the history.

  7. Policy Parrot 8

    This fish can also be fried another way:

    1. Remove trusts from the tax residency requirements, and make all trust settlors liable for tax in NZ.

    2. With approved foreign jurisdictions, any foreign tax charged to either settlor or trustee, entitles the trust to tax credits of the same amount as the foreign tax.

    Rather than the tax agencies chasing their tails, it puts the onus on trustees to demonstrate that they have indeed paid tax somewhere, in order to receive NZ tax-free status.

    • Gristle 8.1

      Yes.

      If you want tax free status as a foreign trust then you need show that you have paid tax in the foreign country or pay it in New Zealand (at the same rate as New Zealander’s do in NZ.)

      Setting up the beasties with the ability to hide identies is being complicit with tax evasion, money laundering etc.

      I don’t understand the payback to NZ. A referendums worth of legal and accounting fees are earned, but that’s it. The rest must be intangibles like why did Mike Sabin get appointed as CEO of a 5star resort development after he left Parliament.

      We need to be better than that. The medacity of Mr Key’s response shows he has a ethic and vision that is light years away from where centre NZ is.

      • Draco T Bastard 8.1.1

        I don’t understand the payback to NZ.

        Lord Ashcroft visited FJK back in 2008. Think he visited FJK again at a later stage.

        • Anne 8.1.1.1

          Yes, and from memory it was in an election year – 2011? Also – once again from memory – didn’t he refuse to tell the media what that second meeting with Ashcroft was all about?

          • Draco T Bastard 8.1.1.1.1

            He’s never said anything about what the meetings were about. He did try to tell us that the first one didn’t happen.

      • Colonial Viper 8.1.2

        I don’t understand the payback to NZ. A referendums worth of legal and accounting fees are earned, but that’s it.

        It is the transnational elite class scratching each others back, when they get into positions of power and influence.

        They have no loyalty to any nation state, and are not in the least interested in ‘return on investment’ for the country as a whole.

        • Draco T Bastard 8.1.2.1

          +1

        • Olwyn 8.1.2.2

          The referendum’s worth of accounting fees goes into the pockets of Key’s friends, so it brings cash into the economy in a way that doesn’t even slightly involve the ghastly peasants. And the practice advertises New Zealand as very welcoming to millionaires and billionaires in need of a bolt hole. From Key’s point of view, it ticks all the boxes.

          • Murray Simmonds 8.1.2.2.1

            Correct, Olwyn.

            ” . . . it brings cash into the economy . . . ”

            YES, and more importantly, from Key’s point of view, it helps to PUMP UP GDP. Its a good example of how essentially, useless NONPRODUCTIVE economic activity artificially inflates the GST figures to make the country look like its doing better that it really is.

            LOOK – GROWTH! (Well actually, its “just pretend” growth – but I won’t tell the minions that . .. . )

            • Draco T Bastard 8.1.2.2.1.1

              GST isn’t paid on financial transactions.

            • nadis 8.1.2.2.1.2

              You’re completely misunderstanding how this works.

              The irony is that the whole foreign trust business brings pretty much nothing into the NZ economy. The only income generated to any segment of NZ would be fees paid to lawyers and accountants which in the greater scheme things would have zero impact on GDP.

              In order for a trust to have non-domiciled status in NZ the beneficiaries of then trust cannot live here so that means they cant spend any money here. If the IRD had any suspicion that a NZ taxpayer was hiding assets with a NZ based trust and trying to use the foreing exemption rules, then you would see some pretty swift visits to homes, law firms and accountants by humourless middle-aged men from Wellington.

              And the assets of the trust can not be in any part of the NZ financial system – not in NZ banks, the sharemarket, residential property or any other form of asset. So there really is no impact in GDP beyond fees paid to a few Shortland Street lawyers.

              That’s also why you won’t see any NZ names involved in NZ domiciled trusts. You may see them doing transactions through other jurisdictions but you won’t see them using NZ trusts via an offshore provide like Mossack Fonseca. I suspect any similar business done by kiwis would tend to be via Guernsey/Jersey by way of Swiss private banks. That’s a more well traveled route.

      • nadis 8.1.3

        “If you want tax free status as a foreign trust then you need show that you have paid tax in the foreign country or pay it in New Zealand (at the same rate as New Zealander’s do in NZ.)”

        No. If you want tax free status you merely have to meet 2 criteria:

        – the beneficiary of any trust is not a NZ tax resident
        – all income in the trust is sourced from outside NZ, no assets can be held in NZ

        There is no check that the trust pays tax elsewhere.

  8. Henry Filth 9

    Great to see some sensible commentary on this issue. Finally.

    All kudos to The Standard for publishing it.

  9. Nick K 10

    These foreign parasites besmirching our country and not paying their fair share of tax, undoubtedly laundered money in most circumstances.

    Who would ever allow this in the first place?

    Oh hang on, now that I’ve posed the question…….

  10. RedLogix 11

    Can’t link to it because it will be geo-blocked, but ABC Four Corners has a belter on this tonight.

  11. Tricledrown 12

    John Key is a financial terrorist supporter and enabler.
    These trust’s are connected to North Korea Putin.
    Assad bank robberies.etc etc.
    David Cameron’s grand father set up the company.

  12. Tautuhi 13

    Money laundering through Trusts is similar to drug dealers cleansing money through the Casino, however different people have different views on what is wrong and what is right?

    It is interesting the people ending up here in NZ and where their original sources of funding/earnings have originated?

  13. Chooky 14

    This interview is interesting from Kathryn Ryan

    ‘Wealth Management researcher on Panama Papers’

    http://www.radionz.co.nz/national/programmes/ninetonoon/audio/201795957/wealth-management-researcher-on-panama-papers

    “As the ripples from the biggest leak in journalistic history continue to spread, academic Brooke Harrington – who spent the better part of a decade investigating wealth management – says the corruption goes well beyond Mossack Fonseca.”

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