The OECD's Base Erosion and Profit Shifting (BEPS) project wants to secure an extra €1 trillion in EU tax annually by stopping multinational corporations using legal loopholes to limit the amount of tax they pay.
Proposed BEPS rules state that from 2017, multinationals will have to pay tax in the countries in which they operate, making it harder for them to avoid paying taxes.
Switzerland - which offers some of the most attractive corporate tax environments in the world - has signed on to the new BEPS standards after holding out for a decade against pressure from the EU.
Its special tax regimes have long been viewed by detractors as state subsidies that distort free competition between domestic and cross-border businesses.
In Switzerland, individual cantons can give tax privileges to foreign management companies that carry out administrative work on Swiss territory.
The profits these companies derive elsewhere in the world can then be submitted to the Swiss canton for taxation at a level far below what domestic businesses are taxed at.
By proposing cantons lower their tax rates on profits for all companies - whether Swiss or foreign - the government hopes to avoid an exodus of these corporations.
It has additionally pledged to compensate any losses of tax revenue by the cantons, up to 1bn Swiss Francs annually, while planning to cover its own losses with a tax on capital gains.
Current business taxation rules for trans-national companies are based on around 3,000 bilateral agreements brought out originally to avoid double taxation.
But the tax landscape they have created has become a breeding ground for loopholes and subsequent tax avoidance that sometimes sees foreign businesses pay no taxes at all, either in the country in which they are operating, or in the country they're registered in.
Some financial records of multinational firms and cross-border businesses show domestic businesses can pay 30% in annual tax, while multinationals pay just 5%.
An OECD list of 400 'accounting tricks' that cross-border businesses use to reduce their tax bills includes: exporting profits to territories with lower tax rates, routing direct investments through tax havens and creating hybrid corporations and financial instruments.
Under BEPS, businesses will have to supply data on their tax structure in other countries, and at the same time, states will exchange that data and assist each other, automatically.
The most substantial update to the international tax system in a hundred years is also seeking to reign in what it calls 'harmful tax practices', such as states offering tax breaks to attract multinationals. Ireland, Holland and Luxembourg have been singled out as particular offenders.
Taxation regimes that provide preferential tax treatment to profits derived from intellectual property - used by Britain, Holland and Belgium - are also in the firing line.
