The Organization for Economic Cooperation and Development sets an international standard for business practices. The organization’s suggestions and standards extend to international tax policy. The OECD sets a gold standard for tax policy transparency, and that should make New Zealanders feel good.
In a recent article, New Zealand was called a tax haven, especially for those foreigners setting up a trust in the country. But this is just not true, according to tax expert Geoff Cone. In fact, the tax lawyer says, New Zealand was one of the first countries to comply with OECD’s tax transparency standards.
Cone says that New Zealand cannot be a tax haven for foreigners setting up trusts because of this transparency standard. Specifically, he cites 2002’s Model Agreement on Exchange of Information on Tax Matters. New Zealand has an agreement in place to communicate with foreign governments seeking to gather information in order to enforce local tax laws. This means that foreign trusts cannot escape the taxes that may be levied back home. This is hardly the making of a tax haven.
Cone also points out that the OECD maintains a list of tax havens around the world. To get on this list, each country is measured by a few different, key metrics. New Zealand does not even come close to any of these metrics, specifically the metrics concerning transparency, tax rates and international communication.
New Zealand has a strong banking system with solid transparency. Tax havens have a startling lack of transparency, oversight and regulation. New Zealand enforces taxes on trusts setup in the country. Tax havens levy very little or no tax on any account setup in the country. And, as discussed above, New Zealand is eager to share information with foreign governments looking to enforce their own laws. Tax havens refuse to communicate with foreign governments in order to protect assets. By these standards, Cone doesn’t believe that New Zealand will ever get on the list of tax havens.
And if there is anyone that you should trust when it comes to trusts, it is Geoff Cone. The man went to University with the intention of working with tax law after graduating. And he held true to his vision.
After graduating from the University of Otago, he moved to Auckland to gain experience working in tax law. He rose in the ranks rather quickly, moving to become a partner in law on the South Island in Christchurch. After spending two years as a litigator in the British West Indies, he has come back home, setting up the only law firm specializing in trusts and tax in New Zealand — Cone Marshall. He has been working in New Zealand tax law since 1980.