New Zealand, along with Japan, has made the largest turn for the worse between 2018 and 2020 among 133 countries on the
Index of Financial Security released today by the Tax Justice Network. The change is in the Index's category of
Integrity of Tax and Financial Regulation.
This is entirely because of change on the indicator of Consistent Personal Income Tax. This measures whether a personal
income tax scheme is comprehensive in scope, defined as uniform and compete, including capital gains. This no doubt
reflects their judgment on New Zealand's abandonment of progress towards a capital gains tax.
The Tax Justice Network's Financial Secrecy Index 2020 shows that the Cayman Islands have overtaken the United States
and Switzerland as the countries most complicit in helping individuals to hide their finances from the rule of law.
Reforms to New Zealand law since the publication of the Panama Papers in 2016 have improved New Zealand's reputation for
financial transparency, and incidentally resulted in the removal of thousands of foreign trusts from the New Zealand
registry as disclosure requirements were tightened by legislation. Overall, New Zealand earns a financial secrecy score
of 59 out of 100, with 100 being full secrecy.
Tax Justice Aotearoa believes New Zealand could make further significant steps towards improved financial transparency
by taking the following measures:requiring public disclosure of details concerning those who own or derive benefits from trustsensure that the owners and beneficiaries of trusts are liable for tax on trust distributions where this is appropriaterequire global corporations to place in the public realm enough information to assess whether or not they are avoiding
tax, known as public country-by-country reporting.
Tax Justice Aotearoa also supports the option proposed by the Ministry of Business, Innovation Employment in its 2018
discussion paper that beneficial ownership information of corporate entities is included on the registers with public
access.
The improvements in financial transparency in the 2017 law changes were only established in New Zealand as a result of
the leaking of information provided to activist journalists. Details of ownership, beneficial rights and possible tax
dodging should not have to depend on the actions of whistle -blowers. Awareness of public disclosure should also act as
an incentive to trust owners and beneficiaries to behave responsibly.New Zealand is ranked at 57 out of 133 countries, with a score of 59
The Financial Secrecy Index ranks each country based on how intensely the country's legal and financial system allows
wealthy criminals to hide and launder money extracted from around the world. The Index grades each country's legal and
financial system with a secrecy score out of 100 where a zero out of 100 is full transparency and 100 out of 100 is full
secrecy. The country's secrecy score is then combined with the volume of financial activity conducted in the country by
non-residents to calculate how much financial secrecy is supplied to the world by the country.
A higher ranking on the index does not mean necessarily a jurisdiction is more secretive, but rather that the
jurisdiction plays a bigger role globally in enabling secretive banking, anonymous shell company ownership, anonymous
real estate ownership or other forms of financial secrecy, which in turn enable money laundering, tax evasion and huge
offshore concentrations of untaxed wealth. A highly secretive jurisdiction that provides little to no financial services
to non-residents, like Samoa (ranked 86th), will rank below a moderately secretive jurisdiction that is a major world
player, like Japan (ranked 7th).