The world's top body for economic coordination unveiled itsblueprint Monday for cracking down on international tax avoidance,an opening salvo in what promises to be a prolonged battle betweencountries and companies over who gets taxed and where.

The Organization for Economic Cooperation and Development, aresearch institute funded by 34 countries including the U.S., isseeking to curb tax haven use and other strategies by companiessuch as Google, Starbucks and Apple, which the group says costs theworld as much as $240 billion a year in lost revenue.

“This is the most important development in international tax inquite a few decades,” said H. David Rosenbloom, an attorney atCaplin & Drysdale in Washington and director of theinternational tax program at New York University's School of Law.“It will definitely make a difference. Exactly what that differencewill be is hard to predict.”

The new guidelines include a series of highly technical plans tolimit strategies with nicknames like the “Double Irish” and the“Dutch Sandwich.” It's the result of a three-year process initiatedin 2012 by the Group of 20 Nations, which asked the Paris-basedOECD to develop a plan.

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

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

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

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

Although the U.S. is the OECD's biggest funder, CongressionalRepublicans have criticized the OECD work on tax loopholes, callingit a way for other countries to increase taxes on Americancompanies. Many of the multinational companies whose tax avoidancetechniques have received publicity are based in the U.S.

India, Brazil

Rosenbloom said he expects the new plan –- known by the acronymBEPS, for “base erosion and profit shifting” –- to triggerincreased disputes between regulators and multinationals around theworld.

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

Some critics say the OECD project hasn't gone far enough, andthat the international corporate tax system should be replaced withone that allocates profits according to real world factors likewhere employees are located or sales are made. Instead, the OECDplan builds on a system which relies on paper transactions betweendifferent subsidiaries of the same company.

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

Michael Durst, a veteran international tax lawyer in Washingtonand longtime critic of the current system, said a better approachwould be to allocate income according to things like the locationof 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, “couldhave a significant positive effect,” Durst said.

One of those: the OECD seeking to restrict transactions betweensubsidiaries of the same company that generate an interest taxdeduction in one country without generating taxable income inanother.

Another action would restrict a company's ability to takeadvantage of the tax treaty benefits of countries like theNetherlands simply by funneling profits through paper subsidiariesthere.

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

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