But those top 20 companies paid only a combined $42 million in tax in the last financial year, Tax Office data shows, meaning Australia may have missed out on as much as $264 million in tax if the companies paid the average rate of 30 per cent. IBM has a $1 billion contract to overhaul computing at the Department of Human Services but has failed to sign onto the government's tax transparency reforms Credit:Craig Warga Australian business leaders have accused the Turnbull government of fostering an "unconscionable situation" and "sabotaging the taxpayer". Japanese tech conglomerate Fujitsu, winner of a $42 million contract for broadcasting technology in August, paid the highest tax rate of the top 20, at 18 per cent. The company, which made a global profit of $1 billion last year, has secured 268 taxpayer-funded tenders over the past decade. All companies that responded to questions from Fairfax Media said they operated legally and reduced their total tax payable by claiming tax credits for development or carrying tax losses forward.

Read their responses in full here. Australia's new spy plane: The Northrop Grumman-built Triton unmanned aircraft. Credit:Northrop Grumman Fairfax Media can reveal Coalition senator Barry O'Sullivan first raised concerns with former treasurer Joe Hockey more than three years ago, but despite the 2015 recommendations of a Senate inquiry, little direct action has been taken by the government. The federal government's Black Economy Taskforce interim report, released on budget night, urged the government to "take the lead" and limit tender opportunities to companies that have a good tax record. Small business ombudsman Kate Carnell backs the penalty rate cut. Credit:Louise Kennerley

In documents recently released under freedom of information, Finance Minister Mathias Cormann previously said assessing a company's tax rate for tenders was impractical and warned that discriminating against foreign companies would be a breach of free trade obligations. "This would demand very specific expertise and impose significant compliance costs for businesses as well as the Commonwealth," he said in 2016. Labor's shadow assistant treasurer Andrew Leigh. Credit:Louise Kennerley Bureau of Statistics figures show that in 2014-15, $52 billion of the $59 billion awarded in tenders were attached to an Australian address. Many, such as airplane titan Boeing, which has taken out 232 tenders over the past decade, operate from an Australian address while being owned by their US based parent company. A spokesman said Boeing paid taxes in Australia in accordance with relevant laws and requirements.

Finance Minister Mathias Cormann said "such actions are not in keeping with the government's commitment to reduce internal and external red tape." Credit:Alex Ellinghausen "Boeing paid its tax for that fiscal year in previous years and then applied tax losses combined with a small R&D tax credit," he said. It is understood Senator O'Sullivan was particularly concerned about the increasingly uneven playing field in IT contracts, a problem that has emerged as more government services move online. Coalition senator Barry O'Sullivan first raised concerns with former treasurer Joe Hockey more than three years ago. Credit:Andrew Meares IBM has a $1 billion contract to overhaul computing at the Department of Human Services but has failed to sign on to the government's tax transparency reforms. It has won 178 tenders in the past decade but paid 0 per cent tax last year.

A confidential ministerial brief for Financial Services Minister Kelly O'Dwyer states the measures in the government's tax integrity package and the Multinational Anti Avoidance Law would ensure that activity taking place in Australia is taxed in Australia. Financial Services Minister Kelly O'Dwyer. Credit:Alex Ellinghausen But neither it nor the recently released procurement rules from the Department of Finance include a provision for withholding government contracts from companies not paying tax; rather suppliers are asked to "provide an economic benefit" through paying tax in Australia. Labor has adopted the 2015 Senate inquiry recommendation that tenderers be forced to state their country of tax. "Disclosure isn't discrimination," said Labor's shadow assistant treasurer Andrew Leigh. "You see the analogy with Plutus payroll [which allegedly defrauded $165 million from the tax office] – good companies which have been working for many decades missed out on government tenders because their model involved paying tax."



Small Business Minister Michael McCormack is also understood to have advocated for a greater focus on small to medium-sized Australian enterprises, which receive less than a quarter of all government contracts, despite the value of all tender contracts more than doubling from $26 billion to $56 billion in the past decade. Mercury chief executive John Anastasiou, who has contracts under threat from SAP, a company that paid 15 per cent tax last year, said he was deeply disturbed by the situation. "It is unconscionable that they are generating large sums of money from Australian taxpayers while contributing a paltry amount to the system that is supporting their business," he wrote in a letter to Prime Minister Malcolm Turnbull.

Optical Superstore chief executive Ian Melrose, who lost a defence contract to Specsavers, headquartered in the corporate tax haven of Guernsey in the Channel Islands, said the concept of letting Australian taxpayers' money support a contract "whose headquarters have a zero tax rate sabotages the Australian taxpayer." Small Business Ombudsman Kate Carnell has launched an investigation into the issue. "This scenario has gotten worse because the government has gone to fewer bigger tenders," she said. "A mower used to get the mowing contract, a maintenance company got the maintenance contract and the defence expert got the defence contract. Those three have now been pulled into one contact picked up by large multinationals." KPMG's Australian tax leader, Grant Wardell-Johnson, said the recommendations of the ATO's black economy report were an appropriate next step.

"If I was to draft the laws and you were involved in anti-avoidance activity that would threaten your procurement," he said.