The Treasurer has labelled profit-shifting companies "thieves" and "cheats" in recent days and said he was in close contact with his British counterpart, George Osborne, who has committed to introducing a Google tax. Some experts believe Mr Osborne is trying to force the US into co-ordinated action on profit-shifting. Mr Hockey cautioned that Australia did not wish to be an "outlier" on the international tax scene but is working on legislation to net more money from multinationals. The government is under pressure to claw back tax from the corporate sector after Fairfax Media revealed on Wednesday that the biggest 900 companies reduced their total tax bills by $25 billion through tax deductions, exemptions and other concessions. Tax Commissioner Chris Jordan described tech multinationals as the "most aggressive" tax minimisers but said the Tax Office would better its target of squeezing an extra $1.1 billion in revenue from multinationals by 2017. Mr Jordan said the best approach on profit-shifting would be to work within the OECD, but this did not mean Australia could not move ahead on its own.

The PBO was asked by shadow assistant treasurer Andrew Leigh in December to model a diverted profits tax similar to the British plan. It stressed that it was not reviewing a specific government policy but found that such a tax would threaten Australia's existing tax treaty agreements. "It is possible that the legal validity of imposing such a tax could be subject to challenge, under either Australian or international law, with potential financial implications for Australia," it said. "In addition, other countries may respond by imposing taxes that breach their tax treaty agreements with Australia. "An explicit breach of an international agreement would be likely to have an adverse impact on Australia's strong reputation as a safe destination for international investment, with negative implications for economic growth over the medium to long term."

The PBO could not model revenue for a tax that broke treaties but estimated that, if it was introduced in such a way that did not break treaties, it would only raise about $90 million over the four-year forward estimates period. A spokesman for Mr Hockey said: "The government is considering a range of options. Any decisions taken will comply with our international obligations and complement the work we have been doing with the G20 and OECD." But Mr Leigh said the PBO advice proved Mr Hockey was "all mouth and no trousers on multinational tax". "The independent advice we've received from the Parliamentary Budget Office is that a diverted profits tax would raise little revenue and may breach Australia's tax treaties," he said. On Wednesday, the Tax Institute said it preferred a co-ordinated international solution, such as the OECD's proposed plan to tackle "base erosion and profit-shifting". "There are many factors that affect what falls in or out of the Australian tax net and an isolated targeted integrity measure may only address part of the broader concern," said Institute president Steve Healey.