New Zealand is to sign an international agreement to help crack down on tax avoidance, Revenue Minister Peter Dunne announced Monday in a rebuttal of criticisms that the country is becoming a "tax haven" for foreign trusts.

Membership of the "Convention on Mutual Administration Assistance in Tax Matters, as amended by the 2010 Protocol," formulated jointly by the Organization for Economic Co-operation and Development (OECD) and the Council of Europe in 1988, would enable New Zealand's Inland Revenue Department to seek help from other tax authorities in detecting and preventing tax evasion and collecting outstanding tax debts from absconding taxpayers.

"This is an important step and consistent with New Zealand's approach to tax matters, and frankly, makes a mockery of tax haven assertions," Dunne said in a statement.

New Zealand had a wide network of tax treaty partners, including 37 double tax agreements and a growing network of tax information exchange agreements.

"The government does not want to tax people more than what is prescribed under current law, but will act firmly where tax evasion is suspected," said Dunne.

"Deliberately artificial tax structures designed with the purpose of defeating New Zealand's tax laws will attract Inland Revenue's scrutiny."

Dunne said tax havens could be identified by secrecy and a lack of transparency, which were not factors in New Zealand.

"Our legislation for taxing trusts is fully transparent. The rules were in fact introduced in the 1980s to prevent tax avoidance by New Zealand residents," he said.

New Zealand's tax legislation contained effective disclosure and record-keeping requirements that ensured Inland Revenue could access full details of the trust and provide that information to tax treaty partners as required.

Criticisms of New Zealand's "tax haven" status followed a television report of problems with foreign trusts in which Dunne responded that the behavior was "legitimate tax avoidance."

The opposition Green Party said Dunne's reference undermined the country's tax system.

Green co-leader Russel Norman said New Zealand's foreign trusts formed part of "a trillion-dollar tax haven industry."

New Zealand law allowed non-residents to set up trusts in New Zealand holding assets not liable for taxation, resulting in about 8,000 foreign trusts registered with the Inland Revenue Department holding assets estimated in the tens of billions of dollars, Norman said in a statement.

Little information was required to register a foreign trust which meant ownership was effectively anonymous and assets are invisible.

"New Zealand's foreign trusts hide billions of dollars of assets and should be broken open to help stop the global tax evasion industry," said Norman.

The main opposition Labor Party said the country's "relaxed attitude to wealthy foreigners" enabled rich families in poor countries to avoid paying fair taxes.

"We are in danger of losing our hard-one reputation as an ethical and respectable country," Labor revenue spokesperson David Clark said in a statement.