Using New Zealand Trusts to Escape Other Countries' Taxes

27 Pages Posted: 19 Jul 2017 Last revised: 28 Sep 2017

See all articles by Michael Littlewood

Michael Littlewood

University of Auckland - Faculty of Law

Date Written: July 13, 2017


The New Zealand tax system was until recently so structured as to allow foreigners to use the country as a tax haven. Specifically, it allowed them to use trusts established in New Zealand (referred to as “foreign trusts”) to avoid and evade the tax they would otherwise have had to pay in their home country. It would seem to have been possible, too, for foreigners to use such trusts for other illicit purposes, in particular money-laundering and financing terrorism. In April 2016 the publicity given to the Panama Papers attracted attention to this aspect of the New Zealand tax system. The government responded by appointing a distinguished accountant, John Shewan, to advise. He recommended that the law be changed and the government accepted his recommendations. This paper explains how the foreign trust rules work, and how the amending legislation was designed to preclude this form of abuse.

Suggested Citation

Littlewood, Michael, Using New Zealand Trusts to Escape Other Countries' Taxes (July 13, 2017). Available at SSRN: or

Michael Littlewood (Contact Author)

University of Auckland - Faculty of Law ( email )

Private Bag 92019
Auckland Mail Centre
Auckland, 1142
New Zealand

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