NEW ZEALAND TO CLOSE TAX LOOPHOLES
Finance Minister Roger Douglas said
New Zealand would enact legislation to prevent local companies
and individuals from using overseas tax havens.
    The government would also outlaw the practice of double
deduction of losses by dual resident companies, known as "double
dipping," Douglas said in a budget statement.
    The anti-tax-haven legislation would affect non-resident
entities, such as companies and trusts, set up in low tax
countries and earning mainly passive investment income, Douglas
said.
    A consultative document will be released in September
explaining the proposed legislation, and a consultative
committee will then receive public submissions and advise the
government on implementation, Douglas said.
    The legislation would attack tax avoidance but not genuine
business activity, he added.
    He said some New Zealand residents were avoiding New
Zealand tax entirely by setting up non-resident entities in tax
havens, which intercepted and gathered income taxable in New
Zealand.
    In a move to counter "double dipping," the government would
no longer allow dual resident companies to group their losses,
Douglas said.
    The proposed legislation would require them to carry tax
losses forward to be offset against future profits, effective
for income years starting after December 17, 1986.
 REUTER
