New Zealand was to strengthen the rules governing foreign owned trusts, in the wake of revelations contained in the leaked Panama Papers, the government said on Wednesday.
Under the new rules foreigners setting up a trust in New Zealand will be required to disclose their name, residential address and country of tax residence to the Inland Revenue Department.
Foreign trusts will also be required to supply annual financial statements, and will appear on a register which can be searched by the police and the Department of Internal Affairs.
The government set up an inquiry into rules in April after a massive leak of documents from Panama-based law firm Mossack Fonseca shone a spotlight on the use of foreign trusts to conceal money from tax authorities.
New Zealand is currently the only country in the OECD where foreigners (except Australians) can set up a trust without having to register their identity or pay local taxes on overseas profits.
Finance Minister Bill English said the changes would ensure New Zealand’s reputation was protected.
The Green Party welcomed the changes, saying the new rules would lead to greater scrutiny and oversight of a “dark industry.
“The secrecy and tax-free status of New Zealand foreign trusts have made them an attractive vehicle for tax avoidance and crime, damaging our reputation abroad,” finance spokesperson Julie Anne Genter said.
The government plans to introduce the legislation to parliament in August.