Thirty multinational companies operating in Australia will face tough new tax liabilities after Treasurer Joe Hockey gave the Tax Commissioner more power to claw back potentially billions of dollars in profits shifted overseas.

The government will also move to "level the playing field" on the GST by requiring foreign companies selling digital products to Australian consumers to collect the tax.

Mr Hockey's plan to stop multinationals shifting profits to low-tax or no-tax nations has been slammed by some tax experts as "pathetic" and others as "draconian".

But some also warn that the changes proposed by the government could start a tax war with the US.

Mr Hockey used an extraordinary budget-eve press conference on Monday to reveal Australia's Tax Commissioner will be given power to recover unpaid taxes by large multinational companies and issue a fine of an additional 100 per cent of those unpaid taxes, plus interest.

Mr Hockey also said the government's online-GST measure would also deliver an anticipated $350 million in additional revenue, to flow directly to the states.

While neither move will have an impact on Tuesday's budget bottom line, they reflect a growing appetite in both sides of politics to tackle multinational tax avoidance and chronic revenue shortfalls as the Commonwealth budget languishes in structural deficit.

It comes after Labor proposed its own multi-billion dollar crackdown on multinational companies that load up their local subsidiaries with debt to minimise profits.

Labor's plan, released in March, aims to collect more than $1.9 billion in revenue over three years by changing how companies claim tax deductions, cracking down on hybrid structures used to reduce tax, and improving transparency of company financial information.

Mr Hockey said the government was ready to move on multinational companies shifting billions in profits overseas, but he would not put a dollar figure on the revenue it may generate.

"We have identified the sums that are being shifted, but identifying the actual amount that is required to be remitted in tax is a different story," Mr Hockey said.

"I am not going to make the same mistake that Labor made and bank money that is not identifiable and bank money that comes from, in [Labor's] case, fake integrity measures."

However, Mr Hockey said that after months of the Australian Tax Office being embedded in these businesses, the government had a better understanding of how they used "contrived or artificial tax arrangements" such as the much-publicised "double Irish Dutch sandwich".

"These contrived arrangements have been used to avoid paying tax in Australia and they are very complicated transactions," Mr Hockey said.

"This is all designed to avoid paying tax in Australia on profits earned in Australia."

The Treasurer will introduce the two pieces of draft legislation into Parliament on Tuesday as part of the budget process.

The government's draft legislation on the online sale of foreign goods is designed to ensure that the suppliers of products and services into Australia charge the GST on those products.

Mr Hockey said the measure had been designed after consultation with the states and territories and would "ensure that the suppliers of digital products and services into Australia charge the GST on those products".

"It is plainly unfair that a supplier of digital products into Australia is not charging the GST whilst someone locally has to charge the GST," he said.

"When the GST legislation was originally drafted, it did not anticipate the massive growth in the supply of digital goods like movie downloads, games and eBooks from overseas."

Mr Hockey said the Organisation for Economic Co-Operation Development had recognised this as a problem for some time.

"A number of other countries have or will introduce similar rules such as Japan, Norway, South Korea, Switzerland and member countries of the European Union," he said.

Tax lawyer Mark Leibler said the government may end up facing disputes with other tax authorities.

"We may well end up trying to tax profits, which are not sourced in Australia and which may raise concerns with other jurisdictions, particularly the United States," he said. "[The US] may form the view that such profits ought more appropriately be taxed by the jurisdiction in which the foreign multinational is headquartered or domiciled."

Tax Justice Network spokesman Mark Zirnsak said Mr Hockey's announcement about tackling the definition of "taxable presence" for companies was "very welcome".

But the government's response to multinational's practice of artificially loading up their Australian subsidiaries with debt to cut their taxable profit was a "pathetic and ... business as usual response", he said.

With Nassim Khadem

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