The report acknowledges the digital economy and globalisation are putting pressure on many domestic and international tax rules that evolved from principles of the League of Nations in the 1920s. New Zealand needs to ensure it is not left behind in this global fight for the almighty tax dollar.
It is also time for politicians to stop finger pointing. They should refocus on creating viable tax legislation, including robust anti-avoidance rules. Engaging in naming and shaming creates brand and reputational damage for corporates. It has the potential to drive them into more taxpayer-friendly jurisdictions, damaging the countries they leave.
The report notes the perception that domestic and international tax rules are broken "and that taxes are paid only by the naive".
Many governments and media have accused US technology companies, such as Google, Facebook and Apple, of being tax dodgers as much of their global profit derives from intellectual property developed and owned outside the US in lower tax jurisdictions.
But the irony of politicians and finger-pointing at advisory firms and large corporates should not be lost on voters and taxpayers. If these corporates and advisers were acting outside the existing rules, they would have been slam-dunked by the relevant authorities.
In fairness to New Zealand politicians and the Inland Revenue Department, they have not actively engaged in this game of political opportunism. Instead, they are working with organisations such as the OECD in trying to find workable solutions to what has become a global challenge.
Our tax authorities also have an admirable track record of engaging with business in a proactive way. Let's hope others around the world learn from this.
The reality is most tax systems are antiquated and do not cater for the globalisation of businesses, let alone the explosion of online commerce.
What is needed is a robust revamp of these rules that is accepted by most major jurisdictions. Without this, a competitive advantage will be created for countries opting to remain outside the international guidelines.
The report identifies six key "pressure areas" of tax-base erosion. These include a review of the application of tax treaties to profits from delivering digital goods and services, and the transfer-pricing rules about the shifting of risks and intangibles.
Also in their sights is the ability to arbitrage differences in countries' tax treatment of debt instruments and the use of debt financing generally, along with the effectiveness of other tax avoidance measures (eg, controlled foreign corporation (CFC) regimes, thin capitalisation).
One area of likely attention from the OECD is the fundamental tax-treaty concept that a company is taxed only on the profits from selling goods or services in a country if it has a "permanent establishment".
An expansion of the definition may sanction further tax collection in a country where the consumer is based.
Another area likely to be reviewed is the ability for multinationals, especially technology companies, to shift legal ownership and risks associated with intellectual property to a desired location.
The OECD asks whether transfer-pricing rules put too much emphasis on legal constructs rather than the economic substance of the arrangements.
None of these changes will happen overnight. The report is unlikely to dampen the close scrutiny by politicians of technology company profit-reporting.
Other jurisdictions may similarly look at ways to name and shame large multinational companies into volunteering tax in the absence of any short-term law reform.
Starbucks has already buckled to pressure from the British government, agreeing to ignore established tax rules and forgo certain deductions in the UK over the next two years. This will cost Starbucks an estimated £10 million ($18 million) a year in tax.
Australia's Assistant Treasurer has announced a willingness to consider options to boost the transparency of taxes paid by large multinationals.
Our Revenue Minister, Peter Dunne, also wants multinational companies operating in New Zealand to reveal more details about global tax affairs, but is looking for more guidance from the OECD.
There is no disagreement around the fact that OECD rules on how international firms are taxed need to be changed and these changes will necessitate local changes in the relevant jurisdictions.
Corporates have a responsibility to operate within the law but they do not have a responsibility to pay taxes based on ideal but non-existent laws.
These large corporates contribute to the tax system in other ways - eg, through employment and via the payment of indirect taxes. Their importance to our society cannot be undervalued at the expense of short-term political advantage.
As the late Sir Winston Churchill said: "Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon."
Nowadays, we see tigers as an endangered species that should be protected even if they are predatory.
Taxpayers, and in particular large corporates, are the very essence of our society because of the role they play in generating economic wealth and creating employment.
Mark Loveday is the leader of transfer pricing for Ernst & Young, and Joanna Doolan is a senior tax partner with Ernst & Young. The views expressed are their own and do not necessarily represent those of Ernst & Young. mark.loveday@nz.ey.com joanna.doolan@nz.ey.com