Prime Minister John Key says the impending release of the Panama Papers documents will not prove New Zealand is a tax haven.

"Just because Nicky Hager says it is a tax haven -- with the greatest of respect -- he is the biggest conspiracy theorist out there," he told Paul Henry on Monday.

Mr Hager has had a week with the Panama Papers. More than 61,000 documents of the 11.5 million set to be released online tomorrow mention New Zealand.

"What the Panama Papers show without any doubt at all, absolutely conclusively, is that New Zealand is functioning as a tax haven," says Mr Hager.

Documents he's released to New Zealand media show that in the past decade the number of trusts in New Zealand has exploded from 2000 to 11,000.

Mossack Fonseca, the Panamanian law firm the documents were leaked from, set up an office in New Zealand in 2013. It told clients -- mainly from South America -- New Zealand's laws allow "for the speedy formation of appropriate mechanisms for wealth protection, inheritance and tax planning".

Its New Zealand operation is headed by Roger Thompson from an office on Queen St, Auckland. He runs accountancy firm Bentleys, which is Mossack Fonseca's New Zealand agent.

Mr Hager described it to New Zealand media as "an ordinary office in the middle of Queen Street where nobody would look, and where it's only inside the computer files and the filing cabinet that you would realise that that is the centre of all kinds of tax haven activity in our country".

It costs clients about $4000 to set up a trust in New Zealand, which isn't taxed. Each trust generates an admin fee of about $3000 a year.

"IRD never knows who the real people are who are behind these trusts," says Mr Hager. "They never get to see the accounts. They never get to see what business they're doing."

Mr Key, whose legal adviser and former lawyer Ken Whitney has been linked to the Panama Papers, says New Zealand's reputation is not at risk.

"A tax haven is where you don't declare information, you can't get information, a locked box… We have information-sharing agreements or double-tax agreements with over 100 countries. We have complied with every request that's ever been made of New Zealand -- 100 percent."

Mr Key says there is no threat to our reputation as New Zealand "barely rates as a footnote" in the international media coverage.

Labour leader Andrew Little says the foreign trust industry in New Zealand has to be shut down to preserve New Zealand's international reputation.

He says the information clearly shows the country is being used to harbour the riches of the "mega wealthy" so they can avoid paying their fair share of taxes.

"On the face of it there is little upside to these secret trusts but there is a lot of downside. New Zealand relies on its excellent global reputation as a good place to do business. It encourages the right investment and opens doors for our exporters.

"We cannot afford to be seen as a tax haven, mentioned in the same breath as the likes of Belize."

Mr Little claims Mr Key has "sided with the greedy and mega-rich" on the Panama Papers issue.

But Mr Little seems to be a man alone in wanting to shut down the industry, with no other political party suggesting it should happen.

Massey University taxation lecturer and former Labour Party candidate Deborah Russell says there's no particular reason for New Zealand to be involved with foreign trusts.

"All we seem to get from them is fees for some lawyers and accountants, which is very nice for those lawyers and accountants but otherwise we don't get any value out of it."

Dr Russell says Labour's proposed ban that might not be feasible.

"I think there are some technical difficulties around banning foreign trusts. What we probably need to look at is whether or not New Zealanders should be trustees of foreign trusts."

Dr Russell says just because someone's name appears in the Panama Papers doesn't necessarily mean they've done anything wrong.

Mr Key says Labour "wants to ban pretty much everything" and blames the party for setting up the rules which led to this situation.

"Labour set up the rules in 1988 about tax. Michael Cullen set up the rules around disclosure of trusts in New Zealand. It's our Government that have actually tightened those things up."

But in 2011 the National-led Government changed the rules around tax on foreign trusts to encourage use of New Zealand as a financial services hub. Mr Key himself stepped in to speed up the implementation of "zero rating of funds" held in foreign trusts, according to a New Zealand Herald report at the time.

Law firm Chapman Tripp, in a post on its website in October 2011, said the change "should make New Zealand managed funds an attractive alternative to funds resident in Luxembourg, Ireland or the Caymans" -- three countries often labelled tax havens.

Mr Hager says the current system is "completely unworkable" if authorities want to crack down on tax-dodging and crime.

Two high-profile clients with trusts in New Zealand are Venezualan banker Carlos Dorado, who bought a large drug company using money held in a New Zealand trust, and Israeli Asaf Anzuri, who sold drones to Mexico.

Wealthy Mexicans appear to use New Zealand to hide wealth, avoiding Mexico's unpredictable inheritance laws.

"If it looks like one and it smells like one and it's being used as one then to all intents and purposes it is a tax haven," says Green Party co-leader James Shaw.

Mr Thompson rejects the accusation, calling New Zealand instead a "high-quality jurisdiction for trusts with a benign tax system".

"I think the assumption that all NZ foreign trusts are being used for illegitimate purposes is unfounded and based largely on ignorance," he told TVNZ.

If the Panama Papers reveal there are New Zealanders using trusts to avoid tax, Mr Key says Inland Revenue will "go after them".

He hasn't seen the documents himself. They are set to be released online in a searchable database Tuesday morning.

Newshub.