Confidential documents obtained from the Tax Office under the Freedom of Information Act show Australia's corporate tax base is in crisis because of the explosion in tax haven dealings by multinational companies.

The alarming data in these internal documents is at odds with the public position of the Australian Tax Office (ATO), which maintains the tax regime in this country is functioning well and most large corporations pay their fair share of tax.

One of the most telling FOI findings is a comparison between real trade and international related party dealings. In 2012, Australia's largest trading partner, China, accounted for 20 per cent of total trade but just a fraction of related party trade, whereas Singapore and Switzerland accounted for 40 per cent of related party trade.

In layman's terms, the purpose of these related party deals is often to siphon profit out of Australia to avoid paying tax on it. Because Australia has a 30 per cent corporate tax rate, the aim of the game is to declare as little profit in this country as possible, and instead to somehow transfer the profit to a low tax regime such as Singapore, which touts rates as low as 5 per cent for big deals.

One of the most cherished tricks is for a related company in, say, Singapore to award a large loan to its related Australian business. The Australian business pays interest on the loan - payments that are funnelled off to Singapore, often tax effective to boot, thanks to the interest deductibility on loans.