NEW ZEALAND: Fall in number of Foreign Trusts

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Under the Taxation (Business Tax, Exchange of Information, and Remedial Matters) Act 2017 in New Zealand, the number of overseas trusts decreased by 75% in the beginning of July, after the new launch of disclosure and registration regulations.
A statement released by Inland Revenue says that the department had been receiving registration applications from less than 3,000 trusts out of the estimated 11,750 trusts known to be operating at the end of 2016.
As a result of the Panama Papers discovery, New Zealand’s foreign trust industry has been hindered ahead of the introduction of new regulations.
Prior to the decline, it is said that accountants and law firms were presumably earning approximately USD $40 million a year through maintaining and setting up foreign trusts.
However, the industry’s reputation was damaged by last year’s scandals involving the hack of the Panamanian law firm, Mossack Fonseca. This also coincided with the unease regarding the possibility that part of the foreign trusts may have been being used by foreigners in order to avoid tax in their home countries and to disguise the proceeds of criminal activities, including graft.