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IRD joins offshore tax crackdown

8746006By Matt Nippert Stuff NZ

The Inland Revenue Department has joined an international crackdown on the use of overseas shell companies and trusts to evade tax.

Tax authorities from Australia, Britain and the United States announced last month they had obtained and were sharing 400 gigabytes of data relating to companies and trusts formed in Singapore, the British Virgin Islands, the Cayman Islands and the Cook Islands.

Raju Budhia, group manager of compliance for IRD, confirmed New Zealand had piggy-backed on to the effort and a request for access to the treasure-trove of company and financial information had been granted.

“Inland Revenue is working closely with our major tax treaty partners, in particular Australia, regarding any New Zealand residents who use offshore havens to evade paying tax,” he said.

Media reports indicate the cache of information from the normally secret tax havens includes 260 gigabytes leaked to the International Consortium of Investigative Journalists (ICIJ) and used to write a series of stories about how individuals and companies, including some New Zealanders, use overseas structures.

The release of the ICIJ data to tax officials had been a point of contention for the investigative journalism group, and it is unclear how it exactly ended up with tax officials in London, Washington and Canberra.

George Osbourne, Britain’s Chancellor of the Exchequer, said at the time the tripartite effort was announced: “The message is simple: if you evade tax, we’re coming after you.”

Budhia said: “Any New Zealand taxpayer that uses a tax haven to cheat on their taxes does so at considerable risk. Regardless of the legal protections supposedly offered by havens, there can never be an absolute guarantee of anonymity.”

The scope of the IRD’s investigation would also capture advisers, such as lawyers and accountants, who actively manage or promote schemes designed to rort the tax system through the use of overseas structures.

“Assisting people to enter illegal arrangements may result in penalties or even prosecution,” Budhia said.

“We warn taxpayers to be aware of any offshore arrangement involving secrecy and concealment. Arrangements involving disguised ownership, hidden income, or anonymous accounts need to be treated with great caution.”

A similar focus in the United Kingdom has thrown the spotlight on to more than 200 advisers who are now being investigated by Her Majesty’s Revenue and Customs.

Budhia said the trove of data was vast and it was too early to say how many tax-dodging New Zealand companies and individuals had been identified.

“While we cannot comment on individual customers, we are interested in obtaining any data that helps us determine what transactions and structures may involve New Zealand or New Zealand tax residents,” he said.

–       © Fairfax NZ News

For more on this story go to:

http://www.stuff.co.nz/business/8745996/IRD-joins-offshore-tax-crackdown

 

 

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