Urgent changes are needed to Australian tax laws, say experts, amid claims BHP Billiton and Rio Tinto avoided paying billions of dollars in tax during the mining boom.
The Australian Tax Office has the mining giants in its sights over claims they have been saving more than $750 million a year in tax.
The companies have been channelling billions of dollars in profits from Australian iron ore sales through companies that pay virtually no tax in Singapore, The Australian Financial Review reported.
The use of Singapore marketing hubs has occurred for nearly a decade, the paper claims, including the mining boom.
Rio declined to comment while BHP denied any wrongdoing or tax motives for the hub, saying it was acting within internationally accepted transfer pricing guidelines.
The allegations come as the big miners, Apple and Google prepare to front a parliamentary inquiry into corporate tax avoidance.
Plunging commodity prices are hurting government coffers, with every $US1 fall in iron ore prices affecting the tax take by $A300 million and national income by $A800 million.
BHP and Rio were probably acting legally and rationally in maximising profits, but were pushing legal and ethical boundaries and the law should be changed, tax experts told AAP.
"First and foremost we are missing out on a lot of significant tax revenue ... it is very un-Australian by the big Australian (BHP)," Deakin University lecturer and tax specialist Dr Adrian Raftery said.
"There is a huge need for our double tax treaty arrangements and transfer pricing issues to be thoroughly reviewed.
"Is it morally right to be taking all of these limited resources of a nation and not repaying them in terms of through the correct channels?"
The double tax treaty arrangements Australia has with about 90 countries are aimed at avoiding overlaps and double taxation, but critics say they create incentives to avoid tax.
Rio boss Sam Walsh complained in March that Australian companies were taxed too highly and it was damaging the economy.
Australia's corporate tax rate of 30 per cent was above many developed countries and Rio paid more than its share, with $US7.1 billion in taxes and royalties in 2014 at an effective rate of 43 per cent, he said.
BHP said its effective rate was more than 45 per cent, including $US7.8 billion in Australia in fiscal 2014 where it was the largest tax payer.
University of Sydney associate professor Antony Ting, an international expert on corporate tax avoidance, said while there was a case to argue for a lower corporate tax rate, that was not a justification for avoiding tax.
He said there were two options, including an international consensus through the Organisation for Economic Co-operation and Development (OECD) - which he was pessimistic about due to a lack of US co-operation.
Plan B was for Australia to follow Britain and tackle the issue through a diverted profits, or "Google tax", which Treasurer Joe Hockey is considering.
That will likely face strong objections from business, experts say, pointing to the significant lobbying against the now defunct mining and carbon taxes.
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