New Zealand lawmakers on Tuesday passed law changes to tighten its lax foreign trust rules and ensure it shares tax information.
The legislation included measures to strengthen and update New Zealand's international tax rules with new disclosure requirements for foreign trusts, Revenue Minister Judith Collins said in a statement.
It included measures to implement the G20/OECD (Organization for Economic Co-operation and Development) standard for the automatic exchange of information, which New Zealand financial institutions would have to comply with. This would "help detect and prevent tax evasion globally," said Collins.
The changes followed an inquiry by an independent tax expert, which concluded in July last year that there was "a reasonable likelihood" that New Zealand's foreign trust regime "is facilitating the hiding of funds or evasion of tax in some instances."
"The rules are not fit for purpose in the context of preserving New Zealand's reputation as a country that cooperates with other jurisdictions to counter money laundering and aggressive tax practices," said the inquiry report.
The government launched the inquiry into foreign trusts in April last year amid claims that wealthy foreigners were using foreign trusts to evade taxes in their home countries or to obscure ill-gotten gains.
Critics claimed that New Zealand foreign trusts enabled tax avoidance because they had no requirement to disclose either the trust beneficiaries or the source of assets.
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