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Foreign trusts wilt in the sunlight, but more transparency needed

The fact that the numbers of foreign trusts registered in New Zealand has plummeted after the Government’s belated and reluctant imposition of a new reporting regime, in the wake of the Panama Papers scandal, shows the need for a transparent, searchable register, says Labour’s Revenue spokesperson Michael Wood.

“It’s no surprise that the 12,000 foreign trusts registered in New Zealand has wilted to around 3000 after IRD’s deadline for more information has passed.

“Labour has been consistent in our belief that plenty of rats would scuttle away when you shine some light on these foreign trusts.

“The Panama Papers revealed strong evidence that there was shady behaviour in a lot of these trusts and that many people didn’t want that behaviour to be known.

“While there is a significant reduction in the numbers, there are still a great deal of foreign trusts registered in New Zealand.

“The fact that around three quarters of the foreign trusts have disappeared indicates how many would’ve existed to conceal financial activities and assets from home jurisdictions.

“As such we need as much transparency as possible. There is still a clear need for a more transparent regime including a fully-searchable public register. There is no justification for this register to not exist, especially when we have a similar searchable register for New Zealand companies.

“A one-off charge of $270 wouldn’t have been a significant inhibitor for most of these trusts, so the likely reason why the number of registered trusts has fallen is because people don’t want any sunlight on their activities.

“The Government can’t claim credit for a regime it took far too long to impose, and even then it was only after significant political and media pressure. After nine years, the National Government is just phoning it in.

“Transparency is essential. Labour’s fresh approach will see the introduction of a searchable register to ensure we shine a stronger light on shadowy foreign trusts,” says Michael Wood.