G20 leaders and finance ministers will receive guidelines on tackling multinational tax avoidance from the OECD at meetings in Turkey later this year.
Australian Tax Commissioner Chris Jordan told a Senate committee on Tuesday the existing international tax architecture was developed in the early 1920s and depended on physical presence in a country.
"With the digital delivery in a lot of services that is a growing part of our consumption ... that old framework is being relied upon to assert that there is no taxing right in Australia," Mr Jordan said.
The government flagged in the budget that it would be implementing the OECD's country-by-country tax reporting from January 1, 2016.
Multinationals will be required to provide a global picture of their operations including income and tax paid in every country they operate.
The information will be shared among tax authorities worldwide.
The government will also work with business to develop a code on public disclosure of greater tax information by large corporates.
Treasury deputy secretary Rob Heferen said this was the first attempt by the government at a voluntary compliance code.
"If that doesn't work then we will revisit the issue and possibly go another path," he said.
Greens senator Christine Milne said she couldn't understand the need to consult with business for two years rather than the tax office just applying it.
Mr Heferen said the government has tabled draft laws giving the tax commissioner powers to pursue profits shifted to another country from activity that should have been taxed in Australia.
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