The Federal Government has signed a multilateral agreement to share tax information on the activities of multinational companies, which would give the Australian Taxation Office (ATO) more power to ensure companies pay their share of tax.
Australia was one of 31 countries to sign the agreement in Paris on Wednesday, under which tax authorities in different jurisdictions would be able to exchange multinationals' country-by-country reports.
The reports would include the companies' international transactions, including the location of their income and taxes paid, as well as setting out their transfer pricing policies.
Assistant Treasurer, Kelly O'Dwyer, said access to pricing information was vital to preventing international profit shifting, and added the agreement would enable the ATO to exchange information on multinationals with foreign tax administrations.
"The Government inherited a tax system from Labor that had failed to keep pace with the changing time, the growing importance of intellectual property, digital technology and integrated global supply chains," O'Dwyer said.
"Critically, we have tightened our transfer pricing rules and introduced the Multinational Anti-Avoidance Law, which Labor voted against."
The law would prevent companies from booking their revenue offshore to avoid Australian tax, which the ATO said would generate hundreds of millions of dollars in revenue.
Country-by-country reporting was one of the outcomes of the OECD/G20 Base Erosion and Profit Shifting (BEPS) project, O'Dwyer said.