'No doubt' NZ is a tax haven - expert

New Zealand was last week revealed as a favourite place for the world's elite to store their wealth (Getty)
New Zealand was last week revealed as a favourite place for the world's elite to store their wealth (Getty)

"It walks like a duck, it talks like a duck -- it is a tax haven, alright? There's no doubt about it."

Deborah Russell, senior lecturer at Massey University's School of Accountancy, says the solutions to our foreign trust law problem are "obvious", and the Government's review is "a bit of a cover-up" that will achieve nothing.

New Zealand was last week revealed as a favourite place for the world's elite to store their wealth, taking advantage of laws which prevent authorities from knowing what's in them, and who they're benefiting.

The Panama Papers -- documents leaked from Panamanian law firm Mossack Fonseca -- reportedly mention New Zealand 60,000 times.

Yesterday Prime Minister John Key announced a review of our trust laws, headed by tax expert John Shewan. Mr Shewan's appointment has already been met with criticism from the Opposition, with New Zealand First leader Winston Peters pointing out he once advised Westpac to try and pay less than half the tax it was legally required to.

Dr Russell says she has no doubt about Mr Shewan's expertise in the minutiae of tax law, but doesn't think he's the right man for the job.

"There are ethical and moral issues here. It's not about anything illegal; it's about whether the law's being pushed too far and we're ethically compromised. I'm not sure that that's what John's going to be focusing on."

In addition to tax, Dr Russell specialises in ethics -- she says a truly neutral academic would have been a better choice to take a look at not just the legality of our trust laws, but how they're being used. Mr Shewan is a former PricewaterhouseCoopers chairman.

Tax authorities presently get very little information about foreign trusts, and though they do have the power to audit them, the problem is not knowing which trusts to look at.

"The way our law is functioning is letting people overseas shelter their assets and income from taxation in the countries they live in," says Dr Russell.

'No doubt' NZ is a tax haven - expert

Her "obvious" solution would be to have trusts declare full financial statements and who the beneficiaries are.

Mr Key has defended the appointment, saying anyone who would do the job would have had practical experience in tax law.

"Ultimately, any person you put in there is going to have some exposure to tax practice in New Zealand, because by definition if they didn't they wouldn't understand the issues you're dealing with."

He also defended the review, saying it will do what needs to be done, "which is to test the proposition that our disclosure rules meets world's best-practice".

While New Zealand may feature 60,000 times in the leaked documents, officials have told him those span 40 years, numerous Governments and "quite a lot of law changes".

"They also seem to indicate one particular company which had registered a lot of shell companies they thought would show up in the papers, and the law change we introduced stops that."

New Zealand also hadn't been dominating international headlines, though there were a number of references to the country.

Labour wants a fully independent inquiry, with leader Andrew Little calling Mr Shewan's review a "charade".

"Yet again, the Prime Minister is doing the absolute minimum to appear as if he is addressing an issue the public are deeply concerned about."

He believes the terms of reference are too narrow and won't achieve what it needs to.

"It won't get to the fundamental question which is 'why do we even have a foreign trusts regime in New Zealand?' I think New Zealanders are very uncomfortable with it and don't want us as a country to be party to tax-dodging arrangements of the mega-wealthy from other countries."

He said while Mr Shewan was undeniably a tax expert, Mr Little said the issue wasn't one about tax.

"It's a question for someone, frankly, disinterested from the tax industry and the tax system and can bring a legal, moral and public policy approach to it. Which is why I think anything less than a High Court judge doing this sort of inquiry is not doing it justice."