The EU thinks that our tax system’s clean bill of health is not so clean

Written By: - Date published: 8:08 am, August 2nd, 2016 - 43 comments
Categories: Europe, International, john key, national, national/act government, Politics, same old national, slippery, tax - Tags:

john key working for new zealand sign with grafitti money bag

Well this is embarrassing. The European Union thinks that New Zealand is operating as a tax haven and is considering sanctions.

From Newshub:

Possible EU sanctions against New Zealand could make travel harder and have a massive effect on the economy.

New Zealand is under investigation by the EU as it prepares a blacklist of global tax havens, Newshub revealed on Monday night.

The grouping of 28 European nations has compiled a list of countries with lax tax laws. Following the release of the so-called Panama Papers, it has confirmed that New Zealand is under investigation.

The EU is our third largest trading partner and worth about $7000 for every person in New Zealand.

The EU loses around NZ$1 trillion to tax havens each year, and it intends to put a stop to the practice by threatening a raft of sanctions against countries that don’t comply to its standards.

The changes to our tax system proposed by the Sherwan report will not make New Zealand compliant. Although the proposal for disclosure of trust settlers and beneficiaries and collection of information concerning financial assets will improve compliance from the report it appears the EU may also require there to be no tax exemption of foreign income, automatic exchange of information with foreign tax authorities in the jurisdictions where the settlers and beneficiaries are resident and a public register of trust ownership and details. New Zealand will not meet these standards even when Mr Shewan’s changes are introduced.

Key and National have made a song and dance about how the OECD has given New Zealand a clean bill of health as far as its tax system is concerned.  He was quoted earlier as saying this:

Tax havens are where there is non-disclosure of information – New Zealand has full disclosure of information, and so all you’ve got is New Zealand’s taken a different view from a lot of different jurisdictions and that’s because the way we tax is we tax a settlor.

“In other words, it’s all about making sure New Zealanders pay their fair share of tax, what we’ve got is quite a legitimate regime.”

But is Key correct? It looks like the EU interprets “full disclosure” differently to John Key.  He thinks the possibility some information may be disclosed is enough whereas it appears the EU want there to be automatic exchange of information and a public register of trust ownership and details.

As I posted earlier:

Has the OECD given New Zealand’s tax system a clean bill of health? Well sort of in that it is better than some of the really notorious tax havens that had stronger secrecy provisions. But the IRD warned in 2013 that our foreign trust tax regime posed a reputational risk. This is hardly a clean bill of health when your own tax entity says that there is a problem.

And the full disclosure requirement? As pointed out by Deborah Russell all that has to be disclosed is the name of the trust, the name of the trustees and if the settlor lives in Australia. Details of the beneficiaries and the assets owned by the trust need not be disclosed.

And the tax exemption is another feature that the EU is looking at.  Labour had the tax rate at 28%.  It was National in 2011 who changed the rate to 0%.

And some response from Twitter (thanks r0b):

https://twitter.com/deanrjyoung/status/759994208384000001

43 comments on “The EU thinks that our tax system’s clean bill of health is not so clean ”

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  1. James 1
    2 August 2016 at 8:19 am

    Perhaps. Just perhaps you should wait until their investigation is over before you jump up and down “celebrating”. May well be that they find everything is all ok once discussions start.

    Wouldn’t be the first time some on this blog have made a lot of something which the courts have decided wasn’t a issue or that the person was innocent (when so many on this blog assumed they were innocent).

    • James 1.1
      2 August 2016 at 8:19 am

      Sorry that last line should have read guilty.

      • mickysavage 1.1.1
        2 August 2016 at 8:35 am

        Who has said the Government is guilty? I say in the post “[t]he European Union thinks that New Zealand is operating as a tax haven and is considering sanctions” and “It looks like the EU interprets “full disclosure” differently to John Key”. How about you address the substance of the post and if you think NZ is not operating as a tax haven say why.

        • BM 1.1.1.1
          2 August 2016 at 9:53 am

          I remember Nadis explaining in quite a lot of detail on numerous times why we’re not a tax haven.
          Can’t link to it because the search is munged.

          • adam 1.1.1.1.1
            2 August 2016 at 10:07 am

            As we explained, it does not matter – at the end of the day, the label and the perception are what matter. And here’s the kicker for all you fanboys.

            The label has stuck, and the perception is we are.

            • BM 1.1.1.1.1.1
              2 August 2016 at 10:12 am

              That’s a bit sad, you’d rather lie and promote bullshit.

              Always thought lefties never had NZs best interest at heart, was all about the power and fuck the consequences.

              Shame really.

              • adam …
                2 August 2016 at 10:23 am

                Again with the misdirection. The only defence left BM? Are you that blind you not willing to even read what people are saying about us? I’m trying to open your eyes up to the fact – no matter how hard you wish this was not a problem, it is.

                If the problem is going to be solved, and I think for all of us it needs to be. The issues of perception and the label need to be dealt with.

                You sticking your fingers in you ears going nothing is wrong – does not work or indeed help.

                Lying, because we point out this issue has not been dealt with – does not work. Yes I’m calling you a liar because you deliberately misrepresented me.

                The fake pathos, really is disingenuous.

                This is a hard issue, deal with it – rather than throw around your usual crap BM. Time to grow up and play with the adults.

                • BM …
                  2 August 2016 at 10:31 am

                  What?

                  You’re the one who said the whole tax haven angle is bull shit, but that doesn’t matter we’ll keep pushing it regardless.

                  Pathetic.

                  • adam …
                    2 August 2016 at 10:58 am

                    I said it does not matter. Because the perception and label have stuck. To argue we are or we are not is at this point is moot.

                    Hypocrite

                  • framu …
                    2 August 2016 at 12:19 pm

                    “You’re the one who said the whole tax haven angle is bull shit, but that doesn’t matter we’ll keep pushing it regardless.”

                    where did adam say this? – I think you’ve read the comment wrong

                  • Paul …
                    2 August 2016 at 5:59 pm

                    What do you stand for except for rampant individualism ?

              • mickysavage …
                2 August 2016 at 10:25 am

                This comment?

                http://thestandard.org.nz/key-changed-the-law-to-turn-nz-into-a-tax-haven/#comment-1159088

                Nadis did say that R0b (and me in this post) were overrepresenting the change to the tax regime made in 2011. He did say “[t]he other things [r0b said ] are correct, especially that NZ is (and always has been) a money launderers paradise …”

                • BM …
                  2 August 2016 at 10:43 am

                  The rest of the quote

                  The other things you say are correct, especially that NZ is (and always has been) a money launderers paradise, but your mad desire to pin everything bad on the personal intervention of John Key is in this case plain wrong. I could just as easily claim the 2007 law passed by Michael Cullen was the genesis of this issue. That would be equally wrong. the reality is that this is just business as usual since the 1980’s or before. If you want to blame anyone you could start with a well known NZ investment bank of the 1980s run by yachting enthusiasts, but all they and everyone has done is exploit out of date legislation.

                  So, apart from some EU bureaucrat gets his y-fronts in a twist, whats changed?

              • reason …
                2 August 2016 at 11:45 am

                BM supports John Key and the nats turning us into a tax haven …. the lot of them have no shame.

                They’ve got that greedy cheating Merill Lynch genetic mutation ….. and evolved into revolting sub-primates.

                Bm’s a joke when he wanks on about ‘hand-outs’ …….. but Nationals friend and white-wash splasher John Shewan was the central figure in an attempted $2.2 BILLION Aussie bank theft …………. where they stole from the people of New Zealand ……. using a ‘tax vehicle’ that Shewan sold them …… it broke down and was shown to be a fraud in New Zealands High Courts.

                *************************************************
                “Banks’ tax dodging tantamount to theft

                ….the combined banks owe the Government and people of New Zealand about $2.25 billion.

                Now I’m not just grumpy.

                I’m furious. That is 10 hospitals or 100 schools or the entire budget deficit forecast for the year just finished. If I stole that much money I would be public enemy number one and rightly so.” ….” Bernard Hickey.
                _______________________________________________

                National rewarded Shewan by getting this fraud artist to look at Nationals tax haven …….

                On a lighter note ……. did you hear about the National joke where John Key sends Don Brash & Shewan to a tax haven ? ……. to teach them GST.

                It sounds fucken funny to me …… Like BMs white disco pants after he’s drunken a glass of John Keys 100 % pure river water ….. it just sounds full of shit.

              • Anno1701 …
                2 August 2016 at 12:35 pm

                “lways thought lefties never had NZs best interest at heart, was all about the power and fuck the consequences.”

                getting tired ?

                your standards are dropping, we expect more !

    • Psycho Milt 1.2
      2 August 2016 at 9:45 am

      Perhaps, just perhaps, they’ll complete their investigation and find that NZ allowing anonymity of foreign settlors and beneficiaries in no way facilitates tax evasion and money-laundering? Well, yes, certainly – and perhaps that lottery ticket you bought is the winning one. All kinds of things are possible, it’s just that some are less likely than others.

    • Bearded Git 1.3
      2 August 2016 at 9:47 am

      Shewan, in his report, didn’t recommend a PUBLIC register of overseas trusts and companies details (finances, beneficiaries). This, and its automatic exchange with other countries is crucial to a fair tax system. (The Nats of course will not implement such a public register off their own back; this is a government that loves rich people’s secrecy.)

      Shewan was on Morning Report this morning blathering in his calm and reassuring voice about how perfect our tax system is without mentioning this-its called lying by omission. Must be a mate of Key’s.

    • Gabby 1.4
      2 August 2016 at 1:10 pm

      Praps you should wait until someone starts jumping up and down celebrating before you start up your whingeomatic.

  2. One Anonymous Bloke 2
    2 August 2016 at 8:24 am

    Couple of typos – Shewan’s name misspelt (unless there’s a Sherwin involved too), and ‘201’ instead of ‘2011’.

    I doubt the EU is under the illusion that the Prime Minister won’t lie through his teeth.

    [Thanks now corrected – MS]

  3. save nz 3
    2 August 2016 at 9:13 am

    Shocking. Thanks John Key and your trusty cronies giving out tax advice. I guess if JK and cronies have stuff to hide in their own tax havens they will not be that keen to reveal what is currently going on there. With his ties to Meryl Lynch and dodgy banking in the news no wonder the EU are keen to investigate.

    Love how in the global terror age, every citizen is expected to be spied on, but governments and their cronies in tax havens, not so much.

    John Key and the Natz are just not smart enough to run this country. Everything they do is a massive stuff up. No wonder John Key is so ‘popular’ with international leaders, just give him a golf game and a handshake and he’s sign and agree to anything in perpetuity. The world’s easiest leader to negotiate with, he says yes to pretty much anything (apart from hiding money which is sacred to rich listers).

    The difficulty with the FTA’s is that you need a smart government and negotiators to run them. Once Helen left, the milk dried up and the farms got sold under National. We lost benefits with Australia and England that we traditionally had and NZ are looking very like a FB wannabe, lots of friends in theory, but nobody around to watch your back in real life.

    Thanks National for destroying our international networks and relationships and making NZ a banana republic led by a smiling assassin.

    • mosa 3.1
      2 August 2016 at 11:46 pm

      Gotta love those Merryl Lynch boys..Key was and still is a Money trader and not much interested in due process , the rule of law, or the built in poor unless he can make sure his money mates can prosper be they casinos , construction companies, seafood companies, move companies, property speculators and developers and not forgetting Ray White and NZ state assets.

  4. Observer Tokoroa 4
    2 August 2016 at 9:46 am

    .
    To James

    . Of course you are hoping that John Key has concealed information expertly. Hoping that our Tax Havens are intact and safe from exposure. As John Key slyly makes them.

    The rest of the OECD countries know that he is sly, and not troubled by the truth.

    . You see, it is a built in part of your sly Tory nature to avoid paying tax. Although you levy heavily on PAYE incomes and chase up any defaulter. You levy every Beneficiary and Pensioner. Approx 20% Tax on those poor creeps – while your Tory friends from John Key down, go out of your way to avoid Income tax. Sly.

    On top of that you saddle low income earners and the population at large with 15% GST Tax. Taxing at that rate on every purchase they make. Every thing they buy to survive and stay alive. Making a total of 35% daily taxation on low income people and PAYE workers.

    You couldn’t wait to lift the outrageous (hit them in the guts Tax) and shoved it up immediately you came into Government. You scumbags could not wait.

    At the same time you gave $Billions of Dollars of tax reductions to your wealthy mates.

    Which is sly, dirty, and scumbag behaviour.

    isn’t it James?

  5. Jenny Kirk 5
    2 August 2016 at 9:55 am

    well, well, well – so someone else out there knows NZ is not as squeaky-clean as Mr Key makes us out to be. About time ! I await further details with interest.

  6. adam 6
    2 August 2016 at 10:03 am

    Oh look all those wingnuts who said this was a non-issue have been proven wrong.

    When we said this would roll on for months, they scoffed. When we said it would hurt us until the Government actually did somthing, rather than their usual bugger all, they sniggered.

    Oh look it still rolling on – the half assed approach to a problem, which this government uses regularly to solve any problems, is an epic fail.

    My guess, unless somthing substantial is done, we could see some dire financial repercussions.

    No doubt the wingnuts are coming, warming up in the back room with put downs, misdirections, and their usual swooning for a failed government.

    • Chuck 6.1
      2 August 2016 at 4:57 pm

      adam its you and your sad and deluded conspiracy bedfellows that were screaming NZ is a tax haven that has interested our EU friend.

      “New Zealand was not so much under scrutiny. But with the revelation of the Panama Papers, some newspapers and electronic media reported that there are thousands of letterbox companies, and we have to investigate that,” he says.”

      “I really believe New Zealand will cooperate because it’s a common interest now in the OECD to find a global standard which will stop the most harmful tax practices and create a fair platform for tax competition.”

      Revenue Minister Michael Woodhouse says…

      “The Government is confident that any objective inquiry will come to the same conclusion that the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes did when they reviewed New Zealand’s tax settings and found us to be fully compliant with OECD standards,” says Mr Woodhouse.

      So there you have it adam, OECD and GFTEITP has found NZ compliant.

      http://www.oecd.org/tax/transparency/exchange-of-information-on-request/ratings/#d.en.342263

      • adam 6.1.1
        2 August 2016 at 10:24 pm

        No date Chucky.

        Where are the dates Chucky? When was the report put online. When was the report done?

        You have these quotes but no reference to back them up chucky. Am I supposed to go with the vibe man?

        This is only a guess, because we have no proof who is speaking throughout or when they did. But let me guess, you cut and paste from a minister, who originally denied there was a problem, then admitted there was a bit of a problem, then told us it was fixed, now the EU is saying we still have a problem, and you believe the minister when he says they are compliant.

        Sheesh Chucky – bit of a stretch, even for you. I know you lot have got use to incompetent ministers from this government, and there really is no hope in fixing that. So I understand why you desperate to back another failed minister from this government, you need some good news. But Chucky, this is getting ridiculous.

        Overal bit of a fail chucky I’d have to give you a d-. Come back with some real evidence, we are not thought of as tax cheats, and a tax haven.

        • Chuck 6.1.1.1
          3 August 2016 at 8:18 am

          adam do I need to spoon feed ya?

          I suggest you go back and read MS intro and then click on the link MS has kindly provided…all the quotes I used are there.

          As for the OECD table, use the link I posted and then click onto the PDF file. However to save you time, its current as of 26 July 2016…and guess what NZ is still compliant.

  7. Bob 7
    2 August 2016 at 10:26 am

    Interesting that Michael Theurer is the one bringing up New Zealand tax disclosure, perhaps those in glass houses shouldn’t throw stones:
    http://www.oecd.org/tax/transparency/exchange-of-information-on-request/ratings/#d.en.342263
    Might want to look at your own country first Michael

  8. Colonial Viper 8
    2 August 2016 at 10:28 am

    So…has the EU got sanctions in place against the UK tax havens of the Channel Islands? The Isle of Mann? How about Monaco? Cypress? Switzerland? Lichtenstein? All tax havens in their own back yard. Operated by agencies based in the City of London, Frankfurt, and the other financial hubs of Europe.

    What an utter farce from the EU to be picking on NZ.

    No wonder the working class of the UK want to leave this hypocrisy.

  9. Observer Tokoroa 9
    2 August 2016 at 11:04 am

    .
    . This blog it seems to me is bringing fair-minded and pro New Zealand citizens together. Not only that, the research they bring with them, coupled with their wit and wisdom is replacing the sickening character of the Tory Parliament.

    The non Tories bring with them genuine, honest to goodness thought and behaviours. They are fair minded. They write what they see. That burns like fire in the rotten heart of Toryism and Class. Note this Michelle Boag and be ashamed!

    It is a pity to have to say this, but Key and his slovenly Deputy have two stinky shit holes. We all need one such facility.

    The Tories however, have commandeered not only the The Parliamentary Toilets but also the House itself. They prefer to shit in the House. Because they are despicable. And also because the Speaker of the House allows them to do it.

    If I were to ask you if John Key brings dignity to our Parliament, What would you say?

    Europe knows he is a swindler and a liar. Russia knows. Syria and the Middle East know it. The Twisted United States of America knows it. Canada knows it. Nuie does too. Of course 27 nations of the EU know it. He is a sham.

    PS 1) Always remember when a Tory invites himself into this blog he/she comes as a liar and a falsifier.

    PS 2) The Tories have systematically destroyed over the past 8 years, our “golden equality” and our once good hold on affordable property and Rentals . They are the same people who have Thrown away our Assets to the wealthy and to foreigners.

    Assets we once thought were ours. Grrrrr !

    They are: The Nationals, The Act, The Maori Party, The United Future Party !

  10. Infused 10
    2 August 2016 at 5:52 pm

    We’d never get sanctioned lol.

    • Paul 10.1
      2 August 2016 at 6:01 pm

      Greed is good.
      Selfishness rules.
      I’m alright Jack.
      All rights, no responsibilities.

      The values of infused.

  11. dave 11
    3 August 2016 at 12:57 am

    the EU has john key by the balls his heart and mind will follow!

  12. Mike Bond 12
    3 August 2016 at 11:31 am

    So sorry for all you luvies. The EU has never said that New Zealand was a tax haven and never considered any sanctions. Shame that we have people that would break this country down just for their own dirty political agendas!

  13. reason 13
    3 August 2016 at 9:37 pm

    Gosh ……. Mike Bonds a dishonest idiot …………..

    James Shaw: Does he acknowledge that the Inland Revenue Department said in 2013 that “our foreign trust ru les continue to attract criticism, including claims that New Zealand is now a tax haven in respect of trusts.”?

    Rt Hon JOHN KEY: I have not seen the particular quote

    James Shaw: If New Zealand is not a tax haven, why would Mossack Fonseca—a company which, by its own admission, has 95 percent of its business in avoiding tax—urge its clients to use New Zealand’s foreign trust and company structures as a way of avoiding tax?

    **********************************************************

    “Andrew Little: If New Zealand is not a tax haven, as he has been claiming, why is an online gambling magnate, Calvin Edward Ayre, who is on the run from US authorities for money-laundering and tax evasion, able to use a New Zealand foreign trust to stash his assets?”

    “Andrew Little: If New Zealand is not a tax haven, as he has been claiming, why was a French investor able to move his holding company from Luxembourg to New Zealand and then tell the French Government that he owed it no tax because he had paid the zero-rated tax rate in New Zealand?”

    *********************************************************************

    Julie Anne Genter: How does an overseas tax department access all of that information if it does not know the name of the foreign trust registered here or the trustee?

    Rt Hon JOHN KEY: It asks for it.

    *****************************************************************
    Julie Anne Genter: Have there been any changes to the rules since the IRD warned his Government in 2013 that “there was a risk to New Zealand’s reputation” because of limited disclosure requirements?

    Rt Hon JOHN KEY: The member would have to direct that question to the Minister responsible for inland revenue. They are the ones who have done all the work with the OECD on the base evasion programme. But, as we know, things like factor and anti – money-laundering legislation have been changing.

    Julie Anne Genter: I seek leave to table an email dated 24 March 2016 from the IRD that states that it has not progressed any reform in this area

    ***********************************************************************