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One in five privately-owned companies with revenue in excess of $100 million paid no tax last year, the Australian Tax Office has revealed.
The figure emerged as the Turnbull government pushes ahead with plans to exempt private companies from new regulations forcing them to publicly disclose their annual tax contribution.
But a campaign by private business, supported by some Coalition MPs, convinced the government that disclosure would increase the risk of targeted kidnappings of company owners.
Fairfax Media revealed in June that the government had not asked for or received any security advice to confirm such a kidnap threat is real.
University of NSW financial disclosure expert, accounting lecturer Jeffrey Knapp, has called the decision "the stupidest excuse for non-disclosure I've ever heard".
A Senate hearing on Tuesday into the tax transparency amendment bill was told that the Australian Federal Police were never asked to assess the risk.
Michael Cranston, the ATO's deputy commissioner for private groups and high-wealth individuals, was being grilled by senators about the transparency measure for companies with revenue above $100 million when he revealed the number that did not pay any tax in 2014 - about 22 per cent.
Some companies are able to pay nil tax when they are have racked up losses due to heavy investment in their business, Mr Cranston said.
But he conceded that some companies were just avoiding tax. "We have seen where there has been aggressive tax planning and we've dealt with that as well," he said.
Liberal senator David Bushby told the hearing there was a danger that companies could be "shamed into paying more tax than they are legally obliged to" if the tax transparency laws were not rescinded.
He said Labor's law had set out to "demonise" companies to "get people excited about tax laws".
Under the Coalition proposal, stockmarket-listed companies would still be required to publish their tax affairs.
ATO officials confirmed they would begin publishing the tax details of larger private companies from mid-December if the government had not passed its bill by then.
The Tax Justice Network argued in its submission to the Senate Economics Legislation Committee that the information to be disclosed by the ATO is nothing that is not already available from a search through the Australian Securities and Investment Commission database or financial research companies such as IBIS World.
In its submission, Teys Australia, a beef supplier to Coles and Woolworths, argued the information was "not otherwise available" and would provide commercially sensitive information to competitors.
Fairfax Media understands Teys has been directly lobbying crossbenchers to support the bill to scrap disclosure.
The company is in a 50:50 partnership with US-based agribusiness multinational Cargill. In 2011, the government of Argentina accused Cargill and three other grain traders of "large-scale tax evasion".
