Dunne dismisses tax haven suggestions

Revenue minister Peter Dunne. File photo / NZPA

Revenue Minister Peter Dunne is dismissing a suggestion New Zealand is a tax haven after criticism over his "legitimate tax avoidance" comments.

In an interview aired by 60 Minutes yesterday about foreign trusts, Mr Dunne said the term tax haven was an exaggeration because it implied illegal tax evasion rather than "legitimate tax avoidance".

"There's nothing sinister about that - minimising one's tax has always been within the law, that's the difference between avoidance and evasion," he said.

The comments sparked criticism, with Green Party co-leader Russel Norman labelling them "astounding".

"The tax system is being undermined by the minister in charge of it," he said.

Prime Minister John Key was today unconcerned by Mr Dunne's comments.

He had not seen the 60 Minutes interview but Mr Dunne would have been using "the absolutely correct technical terms", he said.

"Tax evasion is completely against the law. Tax avoidance means that it's a responsibility of your accountant to actually look to minimise your tax as best you can within the bounds of the law."

Mr Key said servicing foreign trusts in New Zealand was a strong and legitimate business that employed a lot of professionals and added to the New Zealand economy.

"It's a very sensible place to house a trust."

Mr Dunne today dismissed the idea that New Zealand was a tax haven for foreign trusts.

"The key identifying characteristics of tax havens are secrecy and lack of transparency. Those are simply not factors here in New Zealand. Our legislation for taxing trusts is fully transparent."

He also announced that New Zealand would sign a multilateral convention on tax assistance later this month.

The Convention on Mutual Administration Assistance in Tax Matters will give Inland Revenue the ability to request help from other tax authorities in detecting and preventing tax evasion, and collecting outstanding tax debts.

"This is an important step and consistent with New Zealand's approach to tax matters, and frankly, makes a mockery of tax haven assertions," Mr Dunne said.

New Zealand had a wide network of tax treaty partners, including 37 double tax agreements and a growing network of tax information exchange agreements.

Dr Norman has called for more transparency of the roughly 8000 foreign trusts in New Zealand, which are set up with foreign income by non-residents but managed in New Zealand.

The trusts must be registered with Inland Revenue, but are not required to pay tax and their ownership is effectively anonymous.

"New Zealand's foreign trusts hide billions of dollars of assets and should be broken open to help stop the global tax evasion industry," he said.

Labour's revenue spokesman David Clark said Mr Dunne was far too relaxed and hands-off about the wealthy paying their fair share.