New Zealand’s Parliament has approved new rules aimed at requiring foreign trusts to disclose more information to the country’s tax authorities.
The trust reforms were proposed last year, and come after some recent unwelcome publicity involving New Zealand trusts, including reported links to Malaysia’s 1Malaysia Development Bhd probe, and a Bloomberg article earlier this month which referred to the 1MDB matter.
The Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill now requires only royal assent before becoming law. In New Zealand, a bill is considered to have passed by the House of Representatives after when it receives its third reading, but does not become an Act of Parliament until it receives “Royal assent”, which is normally given by the governor-general as the Queen of England’s representative, unless she happens to be in the country.
New regs clarify, modernise, tighten up
According to New Zealand government documents and other sources, the reforms to the country’s trust regulations are designed to clarify core trust concepts and modernise the country’s trust legislation, and require more information on the names of trust beneficiaries, their nationality and the source of the funds, and date back to a Law Commission report that led the government in 2014 to accept that new legislation was needed.
In its story earlier this month, Bloomberg noted that the alleged 1MBD link to New Zealand trusts had called attention to “New Zealand’s surprising appeal as a destination for the ultra-rich to park their wealth”, via its trusts. It also cited New Zealand media reports that there had been “more than 60,000 references” to New Zealand in the “Panama Papers” documents published last year.
The 1MBD case, the Bloomberg article noted, had “shone a spotlight on a multi-billion dollar trust industry in New Zealand that allows foreigners to hold assets with minimal disclosure”.
Nevertheless, in January, New Zealand was tied with Denmark for first place for being perceived, at least, as the least corrupt countries in the world in which to do business, with the publication of Transparency International’s annual Corruption Perceptions Index for 2016.
The country is also one of more than 100 jurisdictions that have agreed to implement the OECD’s Common Reporting Standard, which is introducing the automatic exchange of tax-relevant information between signatory countries, beginning this year and next.