IN~_',
Tax'have:ns -tiffing theveU
overseas, especialy from our major
tax treaty parters as they intensify
their audit work on interntional
promoters of ta haven transactions
Just how secret are tax haven transactions?
and accounts.
Inand Revenue continues to be an
actve participant in both bilateral and
multilateral audit projecs focusing
on tax havens.
f. is
change.
often said
Thisthat,
is especialy
as ta practitioners,
so in respect
we liveofinta
a world
havens,
of contiuous
given the
developments over the past two years in acceleratig international cooperation amongst tax authorities.
Generally, a tax haven is a jurisdicton having a low or zero rate of
taxation whilst also offering comprehensive commercial and bankg
secrecy. Until recently, suçh countries would not engage in exchange of
inormation for tax purposes. Consequently, when investigating taxpayers
with international transactions, Inand Revenue's audit trai would be
broken, and in many cases this would be irreparable.
New Zealand is also tightenig its
anti-money laundering rules which
wil result in many more disclosures
of suspicious tax haven transactions.
~ ~
At the same time, Inand Revenue
r..................................................................................................~
I Inland Revenue I
There are legitimte reasons why a tax haven might be used, and tax
adminstrators. have. no view on where New Zealanders invest as long as
! continues to !
! be an active I
they comply with our tax laws. What Inand Revenue is concerned about are
investments, transactions and schemes that use tax haven countnes to evade or
avoid New Zealand tax.
I participant in I
I both bilateral I
Tax evasion and avoidance through tax havens took on new importance in
the global fiancial crisis of 2008/2009. Transparency has been a key topic of
recnt G20 summits.
Indeed, the G20 leaders were very direct as to the way forward at their June
!
:
;:
: havens
!
:::
I and multilateral I
¡ audit projects !
¡ focusing on tax ¡
~..................................................................................................J
2010 meetig in Toronto where they stated: "We fully support the work of the
is collaborating domestically where
Global Forumon Transparency and Exchange of Information for Tax Purposes,
possible with other law enforcement
and welcomed progress on their peer review process, and the development of
a multilateral mechanism for information exchange which wil be open to all
interested countnes. Since our meeting in London in April
2009, the number of
signed tax information agreements has increased by almost 500. We encourage
agencies to ensure the most effective
use of resources in combatig
fiancial crime.
the Global Foru to report to Leaders by November 2011 on progress countries
have made in addressing the legal framework required to achieve an effective
exchange of inormation.. We stand ready to use countermeasures against ta
We continue to encourage taxpayers
who may have been involved in a
havens. "
tax haven scheme or who may have
hidden income offshore to come
forward and clear the slate by way
Not only does New Zealand have 35 double tax agreements in force with its
major trading and investment parters,. we have also signed 18 tax information
exchnge agreements (TIAs).
Many of these TIs are with iurisdictions that we would have regarded
in the past as popular tax havens for New Zealand residents - the Channel
Islands, Bntish Virgin Islands, Cayman Islands, Cook Islands and Vanuatu.
Ths network of TI wil contiue to expand, allowing Inand Revenue
of makig a volunta disclosure. In
the foreseeable futue, there wil be
no more safe offshore havens and
certiny global tax co-operation is
not some passing trend.
Tax plannng based on tax haven
access to ownership and banking information never thought possible in years
secrecy must surely be at best unwise
in today's envionment, if not
gone by.
downright foolhardy. Tax havens can
no longer guarantee anonymity.a
We are supplementig our domestic sources of information (such as bank
transfer and foreign credit cad data) with a rich supply of inormation from
i 42 I CHART8EIACCOUNTANT810URNAL I FEBRUARY2Dn
John Nash is Chief AdviserInternational Audit at Inland Revenue.