Trust reviewer rejects Bahamas accusation

Labour leader Andrew Little has accused John Shewan, who has been appointed to review New Zealand's rules on foreign trusts, of giving the Bahamas advice to preserve its status as a tax haven.

Speaking in Parliament this afternoon, Mr Little said this cast doubt on Prime Minister John Key's judgment in appointing Mr Shewan to carry out the review.

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Mr Key asked Mr Shewan and Don Brash to go to the Bahamas in 2014 to advise that country on introducing a Goods and Services Tax (GST).

Mr Shewan - a former PwC chairman and established commentator on tax and policy matters - said they did tender advice about GST, but absolutely rejected the accusation it had anything to do with the Bahamas' international tax status.

Since the review was announced on Monday, both Labour and New Zealand First have been questioning the suitability of Mr Shewan to do the review, mainly because of his close association with the financial services industry.

In Parliament today, Mr Key confirmed Mr Shewan and Dr Brash went to the Bahamas in 2014 to talk about GST.

Mr Little asked Mr Key about the details of their advice.

"Can he confirm that John Shewan and Don Brash advised the Bahamas that its financial services be zero-rated for VAT to protect the offshore services industry of that country?"

Mr Key replied that he was not aware of that level of detail.

Mr Little then sought leave to table a media report from the Bahamas that he said was not widely available and that coveredHe Mr Shewan and Dr Brash's trip to the country.

He then asked Mr Key another question. "Does he not see there is a fundamental problem with appointing a person to review our foreign trust laws who has advised a government on how to protect its tax haven status?"

Mr Key replied that he could not confirm whether the Bahamas was a tax haven or not.

"I don't simply know but I don't think [Andrew Little] would know either."

Mr Shewan told RNZ News the trip to the Bahamas had absolutely nothing to do with its status as a tax haven, and any suggestion of that was complete nonsense.

He said that the prime minister of the Bahamas had asked the New Zealand government to provide people to assist with putting GST in place in the Bahamas.

"Mr Key requested Don Brash and myself to go up there which we did.

"We recommended that they modify their proposed regime significantly and simply follow New Zealand's rules across the board."

Mr Shewan said they did recommend backing an existing exemption, as per international practice, that financial services be exempt from GST.

The review announced on Monday follows the release of the so-called Panama Papers, an international journalism investigation based on millions of leaked documents from Panamanian law firm Mossack Fonseca.