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Opinion: NZ embarrassed by Panama Papers revelations

Iceland’s PM, British leader David Cameron’s dad, and Vladimir Putin.

Andrea Vance ONE Voice Source: 1 NEWS

All high-profile individuals, shamed by Panama Papers revelations.

But New Zealand doesn’t just have its share of wealthy tax-dodgers.

This is an entire country embarrassed and tarnished by the contents of Mossack Fonesca’s secret files.

New Zealand is a large chapter of the Panama Papers. It is referenced a staggering 60,940 times.

Roger Thompson – Mossack Fonesca’s man on the ground – features in 4560 documents, and his firm Bentleys well over 3000 times.

This is a damaging chapter, because unlike some of the other jurisdictions featured - Panama, the British Virgin Islands, the Bahamas, for example - New Zealand has a clean reputation to lose.

Kiwi businesses trade on being the honest Johns of the world. 100% Pure, corruption-free and transparent.

A business operating in Auckland CBD is handling Mossack Fonseca’s NZ business. Source: 1 NEWS

As Mr Thompson himself says: “New Zealand is attractive because we have good trust laws, a good independent non- corrupt judicial system and are stable economically and politically.”

It’s a USP that the Government also uses to attract foreign investments.

The paradox is that this standing is the very thing that attracts furtive foreigners.

That, zero tax and loose disclosure requirements.

The Government holds fast to the position that New Zealand is not a tax haven.

From the outset, definitively answering the question: “Is New Zealand a tax haven?” became a crucial focus of our joint investigation.

We pinned the OECD definition of a tax haven to the wall of our “bunker” in central Wellington.

The OECD’s first criteria: No or nominal taxes on the relevant income.

TICK.

If New Zealand trusts don’t earn money here then they don’t pay income, capital gains, or inheritance tax here.

But this alone is generally not considered enough to earn the tax haven badge.

The OECD also considers there needs to be a lack of effective exchange of information.

TICK.

We found that while New Zealand shares information with countries such as Australia, France and the US, it doesn’t have agreements in place with many of the South and Central American countries – and this is where Mossack Fonseca has been promoting New Zealand.

A lack of transparency is another factor the OECD relies on to identify tax havens.

TICK.

Foreigners can name a Mossack Fonseca nominee as the director of the trust and so avoid being identified in the documentation.

Finally, the trusts and companies should also show no substantial activity or purpose, except for holding assets.

TICK.

If these entities were active, we couldn’t see any evidence of it.

Being a tax haven costs the New Zealand only in reputation. It loses no tax revenue. And it gains an industry that some claim is worth up to $50m a year.

In fact, under the National government the number of trusts has grown by 300 per cent – from 3311 trusts in 2008 to more than 10,000 this year.

That brings us to the moral question. Is it OK for NZ to profit by undermining the tax systems of other countries?

The people of Mexico, Venezuela, Brazil, Colombia and Argentina have a right to expect their rich to pay their fair share of taxes.

And they’d be right to point the finger at the New Zealand government for helping the elite swerve those responsibilities.

The investigation into the Panama Papers New Zealand is a journalistic collaboration by reporters from ONE News, RNZ News and investigative journalist Nicky Hager. It has been carried out with the assistance of the International Consortium of Investigative Journalists (ICIJ) and the German newspaper Süddeutshe Zeitung.