Labour leader Andrew Little says New Zealand cannot be seen as a tax haven and "mentioned in the same breath as the likes of Belize".
His comments come after the Panama Papers documents were the subject of an investigation by ONE News, in partnership with RNZ News and investigative journalist Nicky Hager.
The Panama Papers are millions of documents leaked from Mossack Fonseca, a law firm that specialises in setting up foreign trusts.
The files show Mossack Fonseca was actively promoting New Zealand to its wealthy foreign clientele as a good place to do business.
Mr Little says that Kiwis should be concerned as it affects our "international reputation".
"On the face of it, there is little upside to these secret trusts but there is a lot of downside," he said.
"New Zealand relies on its excellent global reputation as a good place to do business.
"It encourages the right investment and opens doors for our exporters.
"We cannot afford to be seen as a tax haven, mentioned in the same breath as the likes of Belize."
John Key says 'NZ is barely even mentioned'
Prime Minister John Key this morning fired back at the investigation, saying New Zealand is barely mentioned in the 11.5 million documents.
Mr Key told TVNZ's Breakfast that New Zealand was a "footnote" in the documents and was not a tax haven.
He said there was no question there have been some foreign trusts used in New Zealand.
"But the point is, to say we are at the heart of it is not correct," he said.
"My officials have gone all over the world looking at all the things around the Panama Papers. New Zealand is barely even mentioned.
"Journalists around the world look at the top 10 tax havens in the world, having had the Panama Papers. New Zealand was not on there."
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.
The reporting teamwas : Andrea Vance, Gyles Beckford, Jane Patterson, Jessica Mutch, Lee Taylor, Nicky Hager and Patrick O’Meara