There is a misguided perception that New Zealand is a tax haven characterized by exotic lands owned by filthy rich people who are always signing great financial deals. Disappointingly, it is not so. There is no hope of New Zealand ever adopting the revered title of a tax haven simply because it will never meet the qualifications which include no or nominal taxes, inhibition of tax information with other governments and general lack of transparency. In addition, New Zealand’s private banking industry does not meet the least of qualifications for high secrecy.
The air was cleared by none other but International Trust and Tax advisor, Geoffrey Cone. He is the director of Geoffrey Cone Agencies Limited, a New Zealand-based company that has been specializing in wealth planning with an emphasis in Latin America, Spain and Italy for more than 16 years. According to him, New Zealand was among the first countries to adopt the 2002 OECD Model Agreement on Exchange of Information on Tax Matters, the highest standard for transparency.
After consultation with various players and authorities in the tax industry, Michael Cullen came up with new rules in which the IRD requires a trustee of a foreign trust taking residence in New Zealand to surrender a Foreign Trust Disclosure form (IR607). Additionally, one is required to record all financial and related dealings for the purpose of ensuring transparency in tax matters. They include the trust deed, particulars of all assets and liabilities as well as those of settlements and distributions which should include the name and address of the recipient. The trustee must also keep records of received and spent money.
The greatest reason for the rise of the number of foreign trusts administered in New Zealand is the recognition of the country as one of the safest and most stable. To cap it all, the country has some of the best laws whose implementation is overseen by a credible and reliable judiciary as well as a strong legal and professional system. Therefore, New Zealand is considered one of the most reputable countries in regard to investment and basing of assets with much of the credit going to the trust lawyers and accountants who run foreign trusts for clients who are based outside the country.
Geoffrey Cone, who is also a partner at Cone Marshall, a law establishment working with families and their advisors all over the world insists that New Zealand have no intention of starting a competition with tax havens. According to him, the country’s competitors are jurisdictions equipped with a tax system that is transparent enough and share similar foreign taxation principles. They include Britain, Singapore and the US.