The bill aims to crack down on companies such as Facebook doing business here but paying little tax.

Work is under way to stop big corporations dodging their New Zealand tax bills.

The Taxation (Neutralising Base Erosion and Profit Shifting) Bill has been introduced to parliament, designed to prevent multinational firms paying artificially low tax bills.

In 2014, Facebook paid only $43,000 in New Zealand tax and Google $233,000.

ROSS GIBLIN/STUFF Revenue Minister Stuart Nash says the bill will bring 'fairness and equity' back to the tax system.

Revenue Minister Stuart Nash said the bill would stop them shifting their profits out of New Zealand.

READ MORE: Labour plans crackdown on multinational tax avoidance to help fund spending plans

"Some multinationals use aggressive strategies to pay little or no tax anywhere in the world.

"This is known as base erosion profit shifting, and is a massive problem. It denies a country its taxation revenue and erodes confidence in the fairness of the tax system. Inland Revenue estimates the new measures could raise approximately $200 million per annum."

In a book co-authored with tax expert Terry Baucher, Labour MP Deborah Russell said the mechanisms used for "aggressive tax planning" could be as simple as basing a company's head office in a country with a low tax rate, and then charging the New Zealand branch a fee for "management services".

"That creates an expense in New Zealand that reduces profits and thus the tax paid here, while creating income in the other country."

Other methods were loans and transfer pricing.

"I am very pleased to introduce legislation that will introduce fairness and equity back into the tax system. New Zealanders expect every company to pay its share of tax, no matter how big or powerful that company may be," Nash said.

The bill contains measures aimed at preventing multinationals getting a tax advantage through artificially high interest rate on loans from related parties to move their profits from New Zealand, artificial arrangements that avoid a taxable presence in New Zealand, related-party transactions to shift profits and hybrid mismatch arrangements to take advantage of low tax rates.

"The proposed new rules will be an effective response to current avoidance techniques, but are not the end of the story. The Government will continue to investigate further options, both legislative and administrative, to counter aggressive tax practices.

"Multinational companies are a welcome part of our economy but they must abide by the rules. They must pay their fair share of tax," Nash said.

The legislation is expected to have its first reading on December 12.