Pacific News Minute: New Zealand Reviews Foreign Trusts as "Panama Papers" Continue to Reverberate
Two very different reactions in two Pacific countries to revelations in the Panama Papers. The government of New Zealand appointed a tax expert to review its practices, while the Government of Samoa defended not just the Panamanian law firm at the heart of the scandal, but nine other trust companies that conduct business there. More from Neal Conan in the Pacific News Minute.
Embarrassed after New Zealand was described as a soft touch, Prime Minister John Key announced a "professional and objective" review of disclosure laws, with a report due by the end of June. In Parliament, Opposition leader Andrew Little demanded that the inquiry into 12,000 foreign trusts be taken out from behind closed doors and described the government’s approach as absolutely hopeless.
The massive leak from Mossack Fonseca identified Samoa as one of the firm's top ten tax havens. On Monday, Samoa's government declared that Mossack Fonseca and nine other licensed trustee companies run legal businesses and that Samoa prides itself on efforts to ensure they operate in compliance with international standards.
A report in the South China Morning Post described why Chinese companies are so fond of offshore shells. As the owner of a mainland trading company, wrote analyst Tom Holland - you simply understate export revenues to the authorities, park your money in an offshore account, maybe in Samoa…then send it back into China, disguised as foreign investment. Your money escapes income tax and qualifies for a raft of other benefits, and Holland says, “the sums involved are huge...in 2012, China's well connected rich routed $50-billion dollars through off shore tax havens ...about one billion of that, through Samoa.”