“The problem we had is that you could easily shift risk or capital without any tax risk,” said Pascal Saint-Amans, who heads the effort as director of the OECD's Center for Tax Policy and Administration. “You could have a cash box in a tax haven where there is nobody. This is over.”

For years, big multinational companies have cut their tax bills using strategies now coming under public criticism: assigning valuable patent rights to shell companies based in tax havens; getting interest deductions for payments made to their own subsidiaries; or cutting deals with countries like Luxembourg to tax profits at low single digit rates.

The OECD plan will be discussed at a meeting of G-20 finance ministers in Lima on Oct. 8. If they approve it, it will then be presented to the group's leaders in Turkey in November for a vote on adoption.

Countries aren't required to follow the OECD's recommendations, but many adopt the group's guidelines as their own international tax rules. Tax regulations in the 34 member countries are required to conform to OECD standards, putting pressure on those nations to adopt some version of the organization's action plan.

Although the U.S. is the OECD's biggest funder, Congressional Republicans have criticized the OECD work on tax loopholes, calling it a way for other countries to increase taxes on American companies. Many of the multinational companies whose tax avoidance techniques have received publicity are based in the U.S.

India, Brazil

Rosenbloom said he expects the new plan –- known by the acronym BEPS, for “base erosion and profit shifting” –- to trigger increased disputes between regulators and multinationals around the world.

“Countries are going to do all sorts of things in the name of BEPS,” he said. In places like India, Brazil, China, Mexico and Canada, “you are going to see renewed aggressiveness in auditing of the multinationals,” he said. “There's a lot of money involved here.”

Some critics say the OECD project hasn't gone far enough, and that the international corporate tax system should be replaced with one that allocates profits according to real world factors like where employees are located or sales are made. Instead, the OECD plan builds on a system which relies on paper transactions between different subsidiaries of the same company.

“They are trying to patch up this system which is doomed from the beginning,” said Tove Ryding, tax justice coordinator at the European Network on Debt and Development, a Brussels- based watchdog organization.

Michael Durst, a veteran international tax lawyer in Washington and longtime critic of the current system, said a better approach would be to allocate income according to things like the location of sales. He also supports imposing a minimum tax on companies, similar to a proposal by President Barack Obama's administration. However, many of the OECD's recommendations, if adopted, “could have a significant positive effect,” Durst said.

One of those: the OECD seeking to restrict transactions between subsidiaries of the same company that generate an interest tax deduction in one country without generating taxable income in another.

Another action would restrict a company's ability to take advantage of the tax treaty benefits of countries like the Netherlands simply by funneling profits through paper subsidiaries there.

The OECD plan also calls for companies to disclose to regulators detailed geographic breakdowns of sales, profits and taxes paid around the world, known as country-by-country reporting.

Bloomberg News

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