Multinational corporations, especially those holding lots of IP, have been found to be using sophisticated but legal schemes to avoid paying billions of tax dollars, according to Australian news reports.

The government fears that the MNC tax schemes are jeopardizing the country’s tax system. According to the Australian Taxation Office (ATO) website, the office has “a continuing concern about related-party arrangements that shift profits out of Australia or deductible expenses into Australia. International related-party dealings now amount to about A$270 billion (US$286 billion) annually, with the rate of growth in these dealings exceeding growth in GDP.”

Technology-oriented MNCs are already ahead of the tax system, as a tax expert told The West Australian that the current tax base focuses on “real” assets.

While there are many tax reduction schemes, transfer pricing is probably the most common of all, as it ships assets, IP and service payments around subsidiary companies in different countries to decrease taxes, said the tax expert.

The ATO is trying to make MNCs pay their fairs shares of taxes with a balanced program of risk reviews and audits, according to its website. “In 2012-13, we estimate that we will undertake around 25 reviews and 29 audits. We will also undertake 40 Advance Pricing Arrangements (APAs) and 15 mutual agreement procedures, which operate to provide relief from double taxation in the event of an adjustment to a taxpayer’s tax liability,” the ATO says.

In addition to the ATO, the government has established a task force led by the treasury to deal with the tax reduction schemes.