A new report by the Organisation for Economic Co-operation and Development recommends that companies be forced to report their earnings and the tax they pay in every country they operate.
The OECD released on Tuesday a set of recommendations designed to tackle profit shifting and tax avoidance by multinational corporations, before the G20 finance ministers meeting this week.
The recommendations include ways for governments to tax global corporations at an international level – rather than individually – through a suite of new treaty provisions, and require earnings and tax to be declared based on each country of operation.
Treasurer Joe Hockey is preparing to host the G20 finance ministers and central bank governors meeting in Cairns on Saturday.
The OECD's plan is designed to create a single set of international tax rules to stop companies from shifting profits to low-tax jurisdictions.
This issue is high on the agenda at the Cairns meeting as governments, desperate to shore up revenue, try to plug the holes left by a wave of new tech-savvy companies.
The OECD report recommends that governments introduce a special tax instrument that will modify tax treaties to ensure loopholes are progressively closed over time.
It calls on governments to introduce country-by-country reporting so that authorities know what amount companies are paying in tax in each country they operate.
Labor assistant treasurer Andrew Leigh urged the government to use its position as G20 chair to push for a clear timetable on the recommendations.
"Taking real action means legislating to close loopholes that let profits drain offshore," he said.
"It means requiring companies to be more transparent about their finances and operations, and putting in place flexible international structures so that tax laws can keep pace with changing business practices.
"[This] offers a fresh opportunity for the Coalition to show it is serious about making major companies pay their fair share of tax."
A survey released this week showed Australians were increasingly concerned about corporate tax avoidance and supported greater measures to tackle profit shifting.
The research, commissioned by advocacy group Tax Justice Network, showed voters were also more likely to view companies such as Apple negatively because of their use of offshore tax havens.
OECD secretary-general Angel Gurria said base erosion and profit shifting had become a "serious risk" to tax revenues, sovereignty and fair tax systems.
"Our recommendations constitute the building blocks for an internationally agreed and co-ordinated response to corporate tax planing strategies that exploit the gaps and loopholes of the current system," he said.
