The transparency standard is a pact that New Zealand keeps to communicate with foreign governments for the purpose of enforcing local tax laws. This does not allow someone setting up a trust in New Zealand to avoid the taxes of their home country. According to Geoff Cone, foreigners like the transparency standard. They believe that New Zealand’s banking and economy are trustworthy, making New Zealand an ideal place to keep a trust.
In fact, New Zealand’s trust process is tailored for foreign governments. Every step of the trust process is done in such a way that an investigating foreign government can easily trace the steps. The transparency protocol was even strengthen in 2006.
Now, anyone setting up a foreign trust in New Zealand must fill out a Foreign Trust Disclosure form (IR607) for the IRD. Plus, the IRD forces anyone setting up a foreign trust to keep other records in English for the purposes of New Zealand taxation. And these records will be shared with foreign governments in order to enforce those tax laws as well.
The assertion that New Zealand is a tax haven via trust law for wealthy foreigners is absurd, according to Geoff Cone. Cone has spent an entire life in New Zealand tax law, operating the only law firm exclusive to trusts and taxes in Auckland.
Geoff Cone graduated from the University of Otago. He then moved to Auckland to work tax law where he gain a reputation for high performance. Catching the eye of a law firm in Christchurch, he moved to the south island to become a partner. For two years, he spent time in the British West Indies as a litigator before returning home to Auckland yet again to run his own firm.
Cone is convinced, through years of experience with foreign trusts, that New Zealand will never be a tax haven. Transparency is only a part of the reason that cites. He also points to the country’s tax system and it’s strong banking regulation.
In order to be listed as a tax haven, the country needs to be rife with a shadow banking industry. These shadow banks operate under the radar because the countries they operate in have very poor oversight and regulation. Not so in New Zealand, says Cone. The tax lawyer says that New Zealand is the exact opposite, attracting foreign trusts with a solid, transparent banking industry.