The Government has appointed former PricewaterhouseCoopers chair John Shewan to conduct an independent investigation into the country's foreign trust disclosure rules.
Prime Minister John Key changed his tune today on whether New Zealand needs to do anything about how foreign trusts work following the Panama Papers leak.
He announced this morning that Cabinet would discuss whether it was necessary to have a look at the rules around disclosure covering foreign trusts registered in New Zealand.
It has appointed Mr Shewan to do the job and will report back to ministers by June 30.
Finance Minister Bill English says the scope will include whether the current rules are "fit for purpose and whether there are practical improvements we can make".
Currently, foreign trusts are required to be registers and keep detailed financial and other records which can be requested by Inland Revenue and passed on to relevant overseas tax authorities.
New Zealand is also signed up to a number of tax treaties.
Mr Sherwan's work will consider how the disclosure rules apply to record keeping, enforcement and sharing information with other tax jurisdictions.
But despite Mr Sherwan being brought in, the Government still disputes New Zealand being labelled a 'tax haven'.
"We have a robust tax base and we're operating under stronger disclosure rules introduced by the previous Labour government in 2006," Revenue Minister Michael Woodhouse says.
"As Michael Cullen said at the time, he sought to develop a policy that worked for all concerned -- enabling New Zealand to cooperate with other tax jurisdictions, while not disrupting the legitimate financial transactions of foreign trusts."
New Zealand was rated as "compliant" by the OECD in this area three years ago -- the highest possible rating.
At his post-Cabinet news conference today, Mr Key said should Mr Sherwan came back with recommendations to change disclosure rules, the Government would look to put them in place.
"If there are things we can do better, if there are improvements that can be made, the Government is under no illusions -- we're more than happy to make those changes."
The review will also look at the existing rules when considered alongside the following:
The investigation will probably not be enough for Opposition parties, who have warned of a possible whitewash and have called for a full-blown inquiry.
Labour Party leader Andrew Little says the "behind-closed-doors" review won't do anything to allay the public's fears about the disclosure rules.
"Any review has to be done in the open and in public. This is a behind closed doors review. I don't think this is going satisfy New Zealanders' concerns that there is something really dodgy going on with our tax system being exploited by the mega rich."
The scope of the review isn't clear enough, Mr Little says.
"We don' t know exactly what he's going to do, who he's going to talk to and it doesn't look like he's going to get to the bottom of what's in the Panama Papers."
He believes the Government is "dragging the chain" on the matter and should be dealt with sooner because of the damage it is doing to New Zealand's international reputation.
New Zealand First leader Winston Peters says he has no faith or confidence in Mr Shewan's appointment.
"In less than 24 hours the Prime Minister has gone from an overseas expert to someone of the Government’s choosing long involved in accountancy practices in New Zealand."
Mr Peters says Mr Shewan has been giving tax advice to New Zealand governments for years and was also involved in a number of high-profile tax cases involving Westpac Bank and IRD, the Penny & Hooper case and the Cook Islands Winebox allegations.
"Mr Key's soft option won't do to allay international criticism that New Zealand is a tax haven," Mr Peters says."This appointment means the Government is not taking the issue of New Zealand's reputation seriously."