UPDATED 7.00pm Foreigners setting up tax-free trusts in New Zealand will soon have to disclose their identity and any beneficiaries, after the Government agreed to sweeping changes in the wake of the Panama Papers.

LISTEN ABOVE: Finance minister Bill English spoke to Larry Williams about the recommendations

Finance Minister Bill English and Revenue Minister Michael Woodhouse said today that they had agreed to all of the recommendations in the Shewan Inquiry into foreign trusts.

The recommendations were “sensible” and “well-reasoned”, Mr English said, and by acting on them the Government would help strengthen disclosure rules and protect New Zealand’s reputation.

“The changes to the foreign trust rules are a matter that the Government intends to move quickly on,” he said.

Mr English told Larry Williams, among Mr Shewan's recommendations is a demand for greater transparency - allowing police, IRD, and foreign governments to scrutinise those setting up foreign trusts in New Zealand.

"He wasn't really there to work out the nature of the activities. He was there to work out how to make sure that we ran a system that meant if things weren't kosher then that would be pretty clear, both to our IRD, and to any other government who asked."

The first step will be the creation of a register of foreign trusts, which police and internal affairs will be able to search.

A new requirement for trusts to make annual disclosures will come into force in the next few months.

While the Government agreed with all of the recommendations, Mr Woodhouse noted that the way in which they were implemented would be “tweaked”.

“We have already committed to a course of action for strengthening New Zealand’s anti-money laundering rules, which will bring in more comprehensive requirements for lawyers, accountants, real estate agents and others,” he said.

“For example, lawyers and accountants will be included in [anti-money laundering] requirements as soon as practicable.

“However due to issues around legal privilege and regime supervision this will form part of the more substantial [anti-money laundering] reform programme already underway, which is being expedited.”

The inquiry by former PwC chairman John Shewan - which was prompted by the Panama Papers – concluded last month that the disclosure rules for New Zealand's foreign trusts were "not fit for purpose" and "light-handed".

It recommended that foreign investors should disclose much more information when setting up a trust and should file annual returns in New Zealand.

Once implemented, any foreigner who sets up, controls, or benefits from a trust based in New Zealand will have to disclose their identity, foreign address and tax details at the time of registration - a significant increase in disclosure to the existing system.