Tuesday, June 27, 2017
Fewer than 70 out of 11,645 New Zealand foreign trusts have reregistered following the introduction of tougher disclosure and eligibility requirements, with only three weeks left to go before the final deadline.
New Zealand taxes trusts on the basis of the tax residence of the settlor. It provides an exemption for foreign-sourced amounts derived by trustees resident in New Zealand if the trust is classified as a foreign trust.
The Taxation (Business Tax, Exchange of Information, and Remedial Matters) Bill seeks to ensure that these trusts cannot be used for aggressive tax avoidance or evasion, by enhancing the amount of information required from taxpayers and verifying their eligibility to the exemption.
The legislation introduced an obligation for affected trusts to register with Inland Revenue, file annual disclosure returns, and pay registration and filing fees in order to continue to benefit from the tax exemption. Information on the register of foreign trusts is to be shared with certain New Zealand government agencies.
The opposition Green Party, which released the numbers, said the Inland Revenue had proactively de-registered 1,797 foreign trusts since February.
"Holding foreign trusts to higher disclosure requirements will improve our international reputation..." Green Party Co-leader James Shaw said.