Tax Commissioner Chris Jordan has accused multinationals including Apple, Microsoft, Google, Rio Tinto and BHP Billiton of giving inaccurate evidence to the Senate inquiry into corporate tax avoidance.
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Speaking at the inquiry's second round of hearings, Mr Jordan did not go so far as saying the companies had misled parliament, but he did say that their evidence at earlier hearings was not accurately reflecting the reality that the level of taxes they pay locally was being contested by the ATO.
Mr Jordan said he had to correct the record. "We do take issue and dispute some of the comments that have been made," he said.
Technology companies Apple, Google and Microsoft have all admitted in earlier hearings that they send profits through "hubs" in Singapore and claimed that they thereby legally pay lower tax. But the companies have been internationally criticised for using no-tax jurisdictions such as Bermuda.
Greens Senator Christine Milne asked whether based on her understanding of Mr Jordan's comments, it was in dispute the technology companies were actually paying any tax in Singapore, and in reality it's more likely they were sending their profits through to no-tax nations.
Mr Jordan said: "They may be paying a small amount of tax in Singapore at the margin, but at a high level, what you've said is correct."
He said that the evidence from tech companies and resources companies that their activity is not profit-shifting was false.
"We do not accept these statements at face value," Mr Jordan said. "We would assert that this is the point of the audits we are undertaking, to determine whether aggressive tax planning is taking place."
He took aim at specific companies, starting with Apple, which had claimed it was paying an appropriate "arms length price" for its products.
Apple's Tony King had said in earlier hearings that Apple Australia bought products such iPads and iPhones from overseas operations, and resold them. It then gets taxed on its local profit.
Mr Jordan said the current ATO audit of Apple was contesting whether these affiliate sales were struck at the right price. He said media commentary had suggested that while the products are sold in countries like Australia the profit is transferred to low-tax jurisdictions. "To paint this picture, media reports have suggested Apple had an effective rate of 1.9 per cent on US$36 billion ($46 billion) in international earnings in 2012," Mr Jordan said.
He also took issue with Microsoft's Bill Sample evidence at earlier hearings that there had been $2 billion in software product and service revenue booked in Singapore but only $100 million in Australia. Mr Jordan said the ATO audit was trying to determine whether this was the appropriate split of revenue, which could thereby mean the company has to pay more tax in Australia.
"We further understand that much of these Singapore profits are paid out as technology fees and end up in Microsoft Bermuda," Mr Jordan said.
Google Australia managing director Maile Carnegie had conceded at earlier hearings that revenue gained by Google for advertising services from Australian customers was booked in Singapore, although she would not disclose the value of this revenue as it would be in "breach of US financial disclosure rules".
Mr Jordan said: "Whilst it is true that some tax is paid in Singapore, we believe it's a very small amount as revenue booked in Singapore is moved to a tax haven, Bermuda, through a series of licensing fee payments. This means the majority of profits made in Australia end up in Bermuda where no tax is paid."
Mr Jordan also disputed claims made by the mining giants at earlier hearings. Rio Tinto's Australian managing director, Phil Edmands, had told the inquiry previously that its Singapore hub made a $719 million profit and paid a 5 per cent tax rate ($44 million) in 2014. Mr Jordan said Rio's claim that this was a result of an arms-length transaction was "the very question that we are robustly contesting".
Mr Jordan said Rio had said they had made a "small immaterial adjustment" on taxes paid to the ATO. "Although perhaps immaterial to Rio in an accounting sense we note that it's substantial from our perspective, well in the order of over $100 million."
At the hearings, BHP corporate affairs president Tony Cudmore cited commercial sensitivity for not revealing figures for its Singapore operations - even though its own sustainability report states that the amount was $26 million in 2014.
Mr Jordan said as well as auditing BHP on tax returns going five years back, the company was disputing amended assessments "in the order of multiple hundreds of millions of dollars arising from previous Singapore hub activity."
He said many of the large companies that had appeared before the inquiry had indicated high effective tax rates as indicators of their performance, but these were being used selectively, and had the "potential to obscure the position of these companies and their historically aggressive tax positions".
He said the ATO would be giving the Senate Economics References Committee, which is heading the inquiry, detailed information of the methodology the agency uses to audit multinationals.
Mr Jordan also hit back at criticisms at earlier hearings from former ATO senior officer Martin Lock that due to more than 3000 job cuts already dished out at the ATO, and another 1700 to come, the agency now lacked technical experts to hunt down multinationals.
Mr Jordan said the area that monitors multinationals, known as public groups and international, had been given more resources than other areas and had employed staff that were able to take a more "holistic" approach, with regard to technical issues as well as commercial realities.
Contacted by Fairfax Media after Mr Jordan's remarks, a Rio spokesman reiterated that the miner had "made a 'relatively moderate' or 'small' payment to the Australian Tax Office in relation to the Singapore Commercial Centre. That payment relates to a number of years and represents about one per cent of our total corporate tax payments in Australia for those years."
"We were also clear with the inquiry that we are under ATO audit for the later years of the Singapore operation," the spokesman said. "We do not have a position paper from the ATO so we are not in dispute. This audit may or may not result in an assessment."
A spokeswoman for Microsoft said: "We answered factually all questions asked of us at the recent Senate Inquiry."
