Big companies have avoided paying billions in tax in Australia by using complex but legal tax minimisation schemes that the Federal Government fears could bleed the country dry.
As Assistant Treasurer David Bradbury accused some multinationals of refusing to pay their "fair share" of tax, there is increasing concern among governments and tax agencies that public support for tax systems is at risk given the measures firms are using.
Institute of Chartered Accountants policy manager Yasser El- Ansary said the Australian corporate tax base, which will reap about $75 billion this year, was losing money because of the way some firms had structured their tax arrangements.
"It's a number that's in the billions of dollars," he said.
"This is a very big problem and it's only going to get bigger, which means it is going to require more and more work by lawmakers to keep ahead of it."
Many of the tax minimisation strategies multinationals use involve so-called "transfer pricing".
Assets, intellectual property, royalties and payments for services are shipped around subsidiary companies in different countries to help firms slash their tax bills.
Starbucks Australia used its most recent annual financial report to note a 66 per cent increase in the total profit of its 22 stores to $2.4 million. It reported a loss before tax of $1.6 million, of which so-called "inter-company royalties" accounted for $2.2 million.
"The Australian market is profitable before inter-company royalties and, therefore, contributes a profit to the consolidated results of Starbucks Corp, the parent company," the report noted.
Apple Australia reported revenue of almost $4.9 billion through last financial year, a 36 per cent, or $1.3 billion boost, over the preceding year.
But it also reported $4.4 billion in "costs of goods sold", which meant it only made a $190 million in profit before tax.
It ended up paying $95 million in tax, of which about $28 million was because of a previous year "tax adjustment". Google Australia, on revenues of $151 million for 2011, reported a loss of $3.1 million
In each case the companies complied with Australian tax laws.
It was revealed recently that Google Inc had avoided about $2 billion in worldwide income taxes last year by shifting $9.8 billion in revenue to a Bermuda shell company.
Google chairman Eric Schmidt told the Independent newspaper he was proud of his tax minimisation systems.
"It's called capitalism. We are proudly capitalistic. I'm not confused about this," he said.
Mr Bradbury said it was clear from Mr Schmidt's comments that many company leaders did not understand their place in society.
"Capitalism is not about avoiding paying your fair share of tax," he said.
"Businesses benefit from operating in an economy built on the social and economic institutions as well as the physical infrastructure and human capital that is funded or supported by the taxes paid by individuals and companies.
"Where some multinational businesses enjoy the benefits of these public goods but refuse to pay their fair share, they are simply lumbering families and local businesses with a higher share of the tax burden into the future."
The Australian Taxation Office has more than 150 staff working on 180 transfer pricing compliance projects, including audits and reviews, as it seeks to control the issue.
"We focus on profit shifting and transfer pricing as part of our compliance approach," an ATO spokesman said.
"On average, our transfer pricing adjustments raise about $250 million in revenue annually."
The Government has set up a Treasury-led task force that is looking at the sustainability of the corporate tax base in the face of "multinational tax minimisation strategies".
One tax expert told _The _ _West Australian _the current tax base was focused on "real" assets.The emergence of new technology companies, with high values placed on "intangibles", such as intellectual property rights, had moved ahead of the tax system.
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