The Tax Office has begun investigating 86 multinational companies in Australia for tax minimisation.

The ATO will not say which companies it is looking into, but there is speculation that Apple and Google are on the list given recent accusations that they have been shifting profits among global subsidiaries as a way of lowering their tax bills.

About 100 Tax Office staff have begun a four-year investigation into the tax affairs of big global companies operating in Australia.

It comes after G20 finance ministers and the OECD promised action on multinationals allegedly using their global reach to lower their tax bills in higher taxing countries such as Australia.

In recent weeks, Apple was accused of shifting almost $9 billion of profits earned in Australia to the lower-taxing jurisdiction of Ireland for about a decade.

The ATO's deputy commissioner Mark Konza says the Tax Office cannot name the companies being investigated.

"At the moment - and I should say this process is ongoing, so other cases will be identified over time - these [are] 86 cases where we felt that the structuring events that had taken place seem to have a very bad effect on a company's Australian tax position or Australian profitability," he said.

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The tax office will investigate whether companies are intentionally reporting profits in subsidiaries in low-tax countries and losses in Australia.

This can occur when companies' accountants formulate where earnings are being generated - the method known as transfer pricing.

"We will issue assessments on companies that we think weren't applying the law correctly," he said.

"If they're involved in profit shifting, they'll get an assessment; they'll get penalties as well."

Mr Konza says there is a subtle but important difference between transfer pricing, which is legal, and profit shifting, which is not.

"Transfer pricing is the price you pay for goods or services you receive; profit shifting is when you inflate those transfer prices above their economic value for the purpose of moving profit out of Australia and avoiding tax," he explained.

"If we uncover companies doing that, we can issue assessments for the proper tax that should have been paid and we can issue penalties on those assessments as well."

New powers

Mr Konza says the ATO has recently been given extra powers to prevent profit shifting.

"We have new transfer pricing legislation only 18 months old, I think that has given us extensive power regarding the correct pricing of transactions, which is what we're mainly examining," he added.

"So, we'll be looking to see how that law works when we take it into these cases."

Mr Konza is confident that at least some of the 86 companies being investigated will have legal action launched against them.

"We have looked at a large number of cases where companies have established marketing hubs or they've got international, large international transactions," he said.

"We have whittled those down to the cases that we believe are higher risk and, based on our previous experience, on our existing workload, we think that we will have a number of cases where we will be challenging pricing. That's why we're doing the program."

Tax law expert Antony Ting from the University of Sydney Business School has welcomed the investigation, but he says it is unclear whether the changes will recover any lost tax revenue.

"It depends on which kind of companies they're looking at. If they're looking at these huge multinationals, I'm sure most of them will have very good tax advice," he cautioned.

"But the current exercise may be fruitful to pick up those less careful multinationals with more aggressive tax structures that are not in with full compliance with the law, then the ATO should be able to get some results."