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Inland Revenue

Tax Policy

PUBLISHED 27 June 2016

Foreign trust inquiry recommendations and BEPS papers released

Ministers English and Woodhouse today released the report from tax expert John Shewan following the Government Inquiry into New Zealand’s foreign trust disclosure rules.

The Ministers also released a Cabinet paper that sets out New Zealand’s response to the issue of base erosion and profit shifting (BEPS). The Cabinet paper explains BEPS and outlines New Zealand’s response to date as well as planned work. This was welcomed by Ministers English and Woodhouse in a media statement today.

For more information see:

Government inquiry into foreign trust disclosure rules
The independent review by John Shewan of New Zealand’s disclosure rules for foreign trusts.

Base erosion and profit shifting (BEPS) – update on the New Zealand work programme
This report to Cabinet provides context for the BEPS issue and describes the work that has taken place so far at the OECD and within New Zealand. It also outlines New Zealand’s proposed BEPS policy work for the next 12 months.

New Zealand’s plan to ensure multinationals pay their fair share of tax
A summary of the work undertaken to date to address BEPS, as well as an outline of planned work.

New Zealand’s taxation framework for inbound investment
This draft document describes New Zealand’s approach to taxing foreign investment income. It is being used as the basis for targeted consultation with private sector representatives, but is being released more widely to facilitate a wide understanding of the trade-offs the Government faces in responding to BEPS. A final version of this paper will be released in the next few months together with consultation documents for public feedback on measures to address BEPS.

Hon Bill English
Minister of Finance

Hon Michael Woodhouse
Minister of Revenue

Media statement

27 June 2016

Govt releases foreign trusts inquiry and steps to strengthen international tax rules

The Government today released tax expert John Shewan’s independent Inquiry into Foreign Trust Disclosure Rules, and the steps it is taking to strengthen tax rules as part of its work with the OECD to clamp down on base erosion and profit shifting (BEPS).

Mr Shewan’s inquiry noted that foreign trusts are legitimate vehicles and that New Zealand’s tax treatment of foreign trusts is appropriate. However, it also recommends disclosure arrangements should be strengthened, including by:

  • Strengthening the initial registration requirements for foreign trusts, and allowing regulatory agencies to search the register.
  • Requiring foreign trusts to file an annual return, including their financial statements and details of distributions.

It also recommended a number of changes to anti-money laundering rules.

“I want to thank Mr Shewan for conducting such a thorough investigation into foreign trusts. His recommendations look sensible and well-reasoned and, as we’ve always said, we are open to making improvements to New Zealand’s already strong tax settings,” Finance Minister Bill English says.

“The Government will look to implement the recommendations after officials have examined the inquiry in detail and reported back to Ministers. A formal response to the Inquiry will therefore be issued in the coming weeks.”

Revenue Minister Michael Woodhouse says that improvements to foreign trust disclosure rules are part of a significant work programme to strengthen New Zealand’s tax laws and keep them in line with international best practice.

“New Zealand has been working intensively with the OECD to develop a global response to BEPS tax strategies, which allow multi-nationals to pay little or no tax by exploiting discrepancies in different countries’ tax rules and shift profits to places where tax rates are lower.”

In October the OECD set out an international action plan to help address this.

“The Government is today releasing the changes New Zealand will make to address profit shifting, based on the OECD action plan, as well as the significant steps we have already taken as part of this global effort,” Mr English says.

Mr Woodhouse says a lot of work has already gone into strengthening New Zealand’s tax rules – meaning that many of the OECD’s recommendations are already implemented.

“Our tax settings are already sound, but there is always room to improve,” he says.

“We have already strengthened our controlled foreign company rules, thin capitalisation rules, bank minimum equity rules, and, more recently, I introduced legislation to improve our non-resident withholding tax rules.

“The next steps include stronger rules preventing excessive payments from a New Zealand company to its foreign parent, greater disclosure requirements for multi-nationals, and further sharing of tax data with foreign authorities.”

Mr English says stopping illegitimate profit shifting is a global issue.

“The BEPS problem stems from mismatched legislation between countries – which is why we are working with the OECD towards a coordinated, global solution,” he says.

The Shewan Inquiry into Foreign Trust Disclosure Rules can be found at

The Government’s BEPS action plan can be found at

Media contacts:
Minister English - Cameron Burrows 021 937 401
Minister Woodhouse - Lily Gilchrist 021 701 208