5. Tax System—Overseas Trusts and Disclosure RegimeGRANT ROBERTSON (Labour—Wellington Central) to the Minister of FinanceTax System—Overseas Trusts and Disclosure Regime5. GRANT ROBERTSON (Labour—Wellington Central) to the Minister of Finance: Did he read the report Taxation of Multinationals" prepared by the Treasury and the Inland Revenue Department dated 15 August 2013 and what was his response to the statement in that report in respect of foreign trusts "to protect our international reputation it may be necessary to strengthen our regulatory framework for disclosure and record keeping"?Hon BILL ENGLISH (Minister of Finance): As I said in my answer to the member's near-identical question on 6 April yes I did read the report and agreed to all the recommendations in it. The main recommendation was that Ministers agree that initiatives "to protect the New Zealand tax base from base erosion and profit shifting should be the key focus". This is exactly what the Government has done. Base erosion and profit-shifting tax strategies allow multinationals to exploit gaps and discrepancies in tax rules in order to shift their profits to foreign countries where tax rates are lower. New Zealand has been working with the OECD and the G20 to develop a coordinated global solution to address this because a solution carried out by one country on its own is unlikely to be effective. Yesterday the Inland Revenue Department (IRD) released the action plan setting out the steps the Government has already taken as well as further steps in the pipeline to address this issue.Grant Robertson: Why did his Government not act on advice from officials in August 2013 again in August 2014 again in November 2014 and again in December 2014 that New Zealand's rules around foreign trusts were damaging our reputation and needed to be tightened?Hon BILL ENGLISH: In August 2013 officials did not recommend the Government take action on it actually. What they said was to take action to protect the New Zealand tax base. There is a long string of further actions that have been taken consistent with New Zealand having one of the tightest regimes for the taxation of foreign ownership of income that can be taxed by New Zealand. So our priority was protecting the New Zealand tax base. The Shewan inquiry has given us clear direction about how to deal with the foreign trusts which are of course all about the tax bases of other countries.Grant Robertson: Is it correct that the November 2014 briefing from the IRD that was referred to him as Minister of Finance already included work on a review of foreign trusts with a report due to go to the Minister of Revenue in December 2014?Hon BILL ENGLISH: I cannot confirm that but it may be either that or some similar report that led to the legislation that is now before the House dealing with the role of look-through companies in respect of foreign trusts about which the advice is that it will bring an end to most of the types of activity that the member and ourselves would like to see finished.Grant Robertson: Will he now admit to this House that the Inland Revenue Department had started work on a review of foreign trusts; that that work was stopped because the foreign trust industry through the Prime Minister's lawyer influenced the Government; and that now 3 years on New Zealand's reputation has been damaged because he did not do that work?Hon BILL ENGLISH: No because none of what the member has said is correct. New Zealand's reputation is that it has one of the toughest regimes for taxing the incomes of foreign companies and he should just go and ask a few of those who regularly complain to us about how tough that regime is. In respect of his first few assertions—as I explained in my first answer the Government's priority has always been the protection of the New Zealand tax base. The Inland Revenue Department in the midst of a large-scale transition in its own organisation and IT system has limited resources. We made decisions about priorities which we stand by.Grant Robertson: In light of that answer why has the Government's priority now changed so that it will tighten the rules around foreign trusts? Is it just because of the publicity from the Panama Papers and otherwise his Government would have gone on siding with the mega-rich and the foreign trust industry?Hon BILL ENGLISH: The member's assertions are simply wrong. The Government will reduce the priority it has been giving to other matters in order to deal with the recommendations of the Shewan inquiry because it is important that we deal with the issues of information disclosure to ensure that everyone does have full confidence in our regime. But I would stand by my statements: New Zealand has one of the toughest regimes in the developed world for the taxation of income of foreign-owned companies.Grant Robertson: I seek leave of the House to table an Inland Revenue Department policy and strategy policy report dated 14 November 2014 which includes the statement that there is work under way on a review of foreign trusts.Mr SPEAKER: I will put the leave. This is a paper prepared by the IRD dated 14 November 2014. Leave is sought to table that particular piece of paper. Is there any objection? There is objection."