A wave of advertisers are leaving Google's YouTube. Credit:Andrew Quilty The federal government said the DPT, to commence on July 1 2017, would raise about $100 million in revenue a year from 2018-19. Australia has a range of other laws aimed at multinationals and the ATO already has audits of big companies under way, which could see up to $2 billion in revenue flowing in, depending on whether or not those companies fight their tax bills. Big profits targeted The DPT laws are aimed at multinationals with global revenue of more than $1 billion and Australian revenue of greater than $25 million. They will be hit with a 40 per cent tax on all profits - that is 10 per cent higher than the 30 per cent company tax rate.

It aims to ensure that the tax paid by global entities properly reflects the economic substance of their activities in Australia and prevents the diversion of profits offshore through contrived arrangements. "The way you increase wages in this country is if businesses grow and make more profits," Treasurer Scott Morrison says. The tax does not apply to managed investment trusts or similar foreign entities, sovereign wealth funds and foreign pension funds. It will, however, encourage significant global entities to provide greater information to the ATO to allow for the timely resolution of tax disputes. Tax Commissioner Chris Jordan has audits of seven companies under way which could result in $2 billion in revenue. Credit:Christopher Pearce

Treasurer Scott Morrison announced the legislation in the 2016-17 budget in response to public outcry over companies shifting billions of dollars in profits each year to lower-tax nations. Mr Morrison told Parliament the laws will "encourage greater cooperation between unco-operative multinationals and the ATO". Timelier resolution? "As a result this will greatly reduce the length of disputes between the ATO and multinationals, and lead to timelier dispute resolution," he said. Australia followed the lead of Britain, which has a similar laws aimed at multinationals which resulted in Google agreeing to a deal with that country's tax authorities to pay £130 million ($214 million) in back taxes.

"It provides a powerful new tool for the Australian Taxation Office to tackle contrived arrangements and unco-operative taxpayers, and will reinforce Australia's position as having some of the toughest laws in the world to combat multinational tax avoidance," Mr Morrison said. But shadow assistant treasurer Andrew Leigh said the government was "waging a phoney war on multinationals". "The fact is that the government estimates their Diverted Profits Tax will raise just one-eighth of the revenue that Labor would raise through closing debt-deduction loopholes," he said. "Since coming to office, the Turnbull government has cut over 3000 staff from the tax office. With fewer staff, it's harder for the tax office to enforce their laws." The staff cuts have happened in the midst of several laws being passed. The Multinational Anti-Avoidance Law (MAAL), introduced in January this year, which also targets multinational profit shifting by boosting the ATO's anti-avoidance powers.

The ATO also has at its disposal tough transfer pricing rules. The government in last year's budget also announced a 1300-member ATO tax avoidance taskforce that would be dedicated to stopping rorting by multinationals, private companies and wealthy individuals. That measure is expected to raise $3.7 billion up to 2020. Audits underway In a speech at The Tax Institute's conference in Adelaide earlier this month, Mr Jordan said the federal government's tax avoidance taskforce was aimed at catching companies "who are not doing the right thing". There were already 71 audits under way in the large business area covering 59 multinational corporations, Mr Jordan said.

At least seven major multinational audits were expected to come to a head before June 30, Mr Jordan said, four in e-commerce and three in the energy and resource industries. The ATO expects liabilities to total more than $2 billion from these seven companies. Oxfam Australia spokeswoman Joy Kyriacou welcomed the passing of the DPT laws, but said more needed to be done to stop about $6 billion of offshoring of profits by Australian-based multinationals. She said the government needs to ensure country-by-country reporting of tax affairs for all big businesses happens and is made public. "Australian Tax Office data shows more than one in three big companies are paying no tax," she said. "Big companies operating from Australia should be required to be transparent and publicly report on their profits, taxes and assets for every country in which they operate, so it's harder for them to shift profits and dodge paying their fair share."