In an interview with the BBC, Pascal Saint-Amans, director of the Centre for Tax Policy at the Organisation for Economic Cooperation and Development (OECD), criticised technology companies in particular for their use of "extremely aggressive" tax planning arrangements to move profits away from the jurisdictions where they sold goods or created revenue to those with lower corporate tax rates.
Saint-Amans said that governments had "let the rules shift away from what should have been achieved" as businesses had become more international, and that companies had been "pushing the boundaries of what was legal". He said that there should be international agreement on the new rules before the next G20 summit of global leaders in November, which would ensure that they were in place "well before" 2020.
"We didn't update the rules," he said in the interview. "We unfortunately needed a crisis to have this wake-up call to say we need to change because it is outdated. Now, governments have decided to move. It shows that when you have political support you can achieve technical changes."
"We have moved from a world where we were so good at eliminating double taxation with tax treaties and transfer pricing rules that we have facilitated double non-taxation. You have rules, they are bilateral, but businesses are global. And of course they can play on the differences between the sovereignties ... So what we need to do is fix the rules and develop better cooperation," he said.
The final rules would need to be "balanced" in order to avoid "multiple taxation … because they will harm cross-border investment", he said.
The OECD is currently working on a single set of international tax rules to prevent multinational companies from artificially shifting profits to low-tax jurisdictions. Its 15-point 'action plan' on how to tackle these base erosion and profit shifting (BEPS) mechanisms, published in July 2013, included plans to neutralise so-called hybrid mismatch arrangements, prevent the abuse of tax treaties and ensure that transfer pricing rules did not allow companies to avoid being taxed in the jurisdictions where they make their profits.
Tax expert Heather Self of Pinsent Masons, the law firm behind Out-Law.com, said that Saint-Amans' comments indicated that the OECD was in the process of drafting its next major report, which is due to be published by October 2015. The OECD's final recommendations are due before the end of the year, she added.
"We are entering an interesting phase of the BEPS project - the nearer it gets to completion, the more there will be political signalling from a number of parties," she said.
"It is clear that pressure is building on US tech companies in particular to pay more tax – the EU group of Experts on the Digital Economy highlighted that many of them pay very low rates of tax on sales outside the US. However, even if there is agreement that these companies should pay more tax, there is likely to be a fight over who gets to tax them: if BEPS succeeds in imposing additional tax in countries such as the UK, surely the US will respond by changing its own tax system to keep the tax receipts itself," she said.
Ahead of the OECD's final report, there has already been some fragmentation in different countries' approaches to the taxation of multinational companies. The UK, for example, introduced a diverted profits tax (DPT) last month, charged when a foreign company "exploits the permanent establishment rules" or where a company with a UK taxable presence creates a tax advantage by using arrangements that "lack economic substance". This week, the Australian government announced that it would introduce a package of anti-avoidance measures, but that it did not intend to replicate the UK's new rules.
Saint-Amans told the BBC that the UK's approach would have to be "coordinated" with the OECD's final proposals.