Many countries, like New Zealand, has estate taxes. Again, most people will not have to deal with estate taxes because they do not have enough wealth. But estate taxes are levied on inheritance left behind by someone with tremendous wealth. The government takes a cut before the assets are passed on tot he beneficiaries.
To mitigate taxes even further, some wealthy people setup trusts. Trusts avoid some of these taxes because the wealth is transferred to a third party known as a trustee. It is a financial arrangement that can benefit some people leaving behind their fortune.
So, to really avoid taxes, some choose to set up trusts in foreign countries that provide tax haven. This can allow a family to dodge a lot of taxes as wealth is transferred, especially if it is hidden from the person’s home country.
Some are starting to fear that New Zealand is becoming a tax haven for foreigners, especially when it involves trusts. This isn’t so, according to New Zealand tax expert Geoff Cone. New Zealand has never made the list of tax havens and the lifelong tax lawyer doesn’t believe that the country will ever be included on the list.
This is because of the countries banking regulations. There is clear oversight in New Zealand and this can scare off foreigners looking to hide money. It leaves an easily traceable paper trail for any foreign governments that come looking for their money.
New Zealand also charges a high tax rate. Tax haven countries do not charge prohibitive taxes because the wealthy are looking to keep the largest share of their wealth as possible. Bringing a large chunk of money to New Zealand is folly for foreigners looking to hide money because they’ll lose a good share by doing so.
But most importantly, all records in New Zealand are kept in English and the Kiwi government has agreements to share these records with dozens of foreign countries. This makes hiding money nearly impossible.
Geoff Cone is an expert in New Zealand trusts. He currently runs his own law firm in Auckland and sets trusts up for wealthy investors. He says they are flocking to New Zealand because of the transparency and reliability.
He’s been doing it his whole life. He graduated from the University of Otago and has worked in tax law firms in Auckland, the British West Indies and Christchurch.